05/11 U.S. stocks edge up on chipmakers despite U.S.-Iran and consumer uncertainty

U.S. stocks started lower, citing Trump’s rejection of Iran’s proposal, but turned to higher expectations as some semiconductor companies, including Micron (+6.50%), continued to strengthen. Of course, interest rates on U.K. government bonds rose sharply after local elections, stimulating a rise in U.S. interest rates, and fluctuating as Trump was put up for sale on news that he would discuss the possibility of resuming military action against Iran. However, the index closed slightly higher (+0.19% Dow, +0.10% Nasdaq, +0.19% S&P 500 +0.19% and Russell 2000 +0.33%, Philadelphia Semiconductor Index +2.60%) due to the strength of options trading focused on semiconductor companies

*Variants: US-Iran, Gasoline Prices and Consumption, UK Local Elections and Interest Rates

Uncertainty has escalated again as U.S. President Trump mentioned his rejection of Iran’s proposal ahead of the U.S.-Iran negotiations. In particular, news has emerged that Trump will attend a meeting with the national security team while mentioning that he is considering resuming Project Freedom. Vice President, Secretary of State, Secretary of Defense, Chairman of the Joint Chiefs of Staff, and CIA Director attended the meeting. The market will reportedly discuss the resumption of Project Freedom or the resumption of bombing at the meeting.

Of course, analysts say that the timing of the U.S.-China summit (14-15) will not proceed immediately and that the issue between China and Iran can be carried out after consultation. After all, there is a lingering concern over whether military action will resume this weekend or negotiations will proceed dramatically. On the related news, international oil prices rise and government bond rates rise along with British issues. The U.S. stock market has been partially opened for sale, but its impact is limited.

One of the characteristics of today’s market is the shrinking consumption-related stocks. This has continued to make a comeback, but as related issues expand today, related stocks fall, weighing on the index. Amid the continued U.S.-Iran unrest, U.S. gasoline prices hit $4.56 a gallon, the highest level since 2022 when they reached an all-time high. In particular, the EIA’s announcement last week that gasoline production and supply fell also affected the price increase.

The problem is that these gasoline prices basically serve as ‘quasi-tax’ because they serve as essential consumer goods in the United States. Therefore, consumption capacity decreases due to such a surge in gasoline prices. In fact, after exceeding $4 in 2008, 2012, and 2022, U.S. consumption has increased, which has increased economic uncertainty. In addition, interest on loans due to high interest rates on government bonds and prolonged inflation have increased consumer anxiety. Today, many investment companies, including Wells Fargo and BOA, warn that the performance of consumer goods companies will slow down in the future, reflecting weak demand. Most of the related stocks fell on the news.

The result of local elections in the U.K. also increased volatility in the financial market. While the far-right British Reform Party won a record-breaking victory by rapidly expanding the number of seats to 1,454 from the previous two, both the Labor Party and the Conservative Party recorded poor performances. As a result, the market began to worry about the possibility of fiscal expansion to restore public sentiment along with weakening leadership of Prime Minister Keir Starmer, and interest rates on U.K. government bonds surged due to the rising welfare and government bond issuance. On top of that, interest rates on government bonds in the Eurozone also rose as some investment companies raised the possibility of an additional rate hike by the end of this year. The rise in interest rates from Europe raises interest rates on U.S. government bonds, stimulating concerns over rising mortgage rates and slowing consumption

*Featured stocks: Micron, Nvidia, Tesla up Vs. Alphabet, MS. Walmart And More Fall

Semiconductor: Nvidia Rises On Intel CEO’s Comments Ahead Of Earnings Release
Nvidia (+1.97%) rose as Melius Research maintained its buying opinion, noting that its earnings release next week could trigger valuation ratings. In addition, Intel (+3.62%) CEO Libutan posted on the previous day that he was “working with Nvidia to develop interesting new products.” The market is highly anticipated because Intel and Nvidia announced in September last year that they would work together to develop products for data centers that include connecting Nvidia’s GPU to Intel’s CPU to handle AI workloads. Intel’s related news and the news that it is working with SK Hynix to develop advanced packaging technology used in high-end semiconductors also contributed to the increase.

Semiconductors: Related Companies Rise On CPU-Related Supercycle Expectations
As for AMD (+0.79 percent), Qualcomm (+8.42 percent), and Intel, GF Securities announced that it would benefit from server CPU supercycle related to AI infrastructure growth, related stocks rose. Noting that the importance of CPUs is growing, especially as AI shifts from learning to inference and agent-type AI, the server CPU market is expected to grow from $26 billion in 2025 to $135 billion in 2030. AMD and Intel announced that they could be short-term beneficiaries and Qualcomm could be long-term winners given their dominant position. AMD returned higher as profit-taking was held ahead of the market close. Broadcom (-0.37 percent) fell slightly as it was highlighted that competition with Intel and others over inference-type chips could intensify. TSMC (-1.73 percent) also continued to digest sales as Intel and others are emerging as competitors amid continued sales after recently announcing sluggish monthly sales. Philadelphia Semiconductor Index rose 2.60 percent

Semiconductor Storage: Micron Continues Rising As Good Materials Focus
Micron (+6.50%) rose sharply as concerns over Samsung Electronics’ labor-management disputes were highlighted. Analysts say that the actual strike could disrupt the supply of memory chips. Amid this development, Deutsche Bank raised its target price to $1,000 citing structural strength in AI-based memory demand. In addition, JP Morgan raised its outlook on the KOSPI and analyzed that the memory growth cycle will continue from 2027 to 2028 in terms of average unit price (ASP) and shipment volumes for the semiconductor industry. In particular, the supply and demand factors due to the rapid increase in call options are also rising factors. Western Digital (+7.46%) has recently announced that