The Iran situation continues to be problematic. Iran fired on a ship in the Strait of Hormuz last night. So much for the ceasefire. rose as traffic slowed through the Strait and on expectations of a response from the U.S. Interest rates moved up on the inflation risk. International yields are up slightly more than the U.S.
Stocks have pulled back on the news. Particularly, indexes with a big exposure to semiconductors, which dropped 5.3%. Memory stocks are down 8.2%. The volatility is centered on semiconductors once again. Adding to the volatility was , the South Korean tech giant, a huge memory chip manufacturer, which reported quarterly earnings today that were above NVIDIA’s and saw their shares, up 373% LTM, fall as much as 10%, recovering to less than -7%.
While the major indexes are being pushed around by semiconductors, many other industry sectors are doing well. Today we find healthcare, consumer staples, utilities, communication services, energy, and real estate all up over 1%. This is the risk of the high concentration that semiconductors have grown to in the indexes. Keeping a longer perspective, with semiconductors up 59.5% YTD, memory +113%, some profit taking is to be expected.
The trend remains positive, the AI theme is intact, and strong earnings are on the way. The Iran situation still casts a shadow, with the chance for sudden high escalation still not out of the question, but when finally resolved will be a strong catalyst for a meaningful relief rally.