(June 15): US stocks rose sharply after the US and Iran reached an interim deal to reopen the Strait of Hormuz, sending oil prices lower and easing concern about inflation ahead of Kevin Warsh’s first meeting as chairman of the Federal Reserve this week. SpaceX shares advanced, helping boost risk-on sentiment.
The technology-heavy Nasdaq 100 jumped 2.5% by 9.34am in New York, while the S&P 500 Index rose 1.5%. The Philadephia Semiconductor Index rose around 4%. Chipmakers and AI-linked companies surged, with Micron Technology Inc advancing 7.5% and Sandisk Corp up 3.9%.
West Texas Intermediate crude fell around 5% to about US$80.50 a barrel. US and Iranian officials are due to meet in Switzerland on June 19 to formally sign the deal. Neither side has yet released a text, leaving sticking points for the next stage of talks.
“We will be keeping a close eye on how views around the Fed, interest rates, and inflation are adjusted in the weeks ahead” as equity valuations have been de-frothed, but don’t look deeply compelling, RBC head of US equity strategy research Lori Calvasina wrote in a Monday note.
In single-stock news, Nvidia Corp rose 2.1% as it sells high-grade debt for the first time in about five years, seeking to raise at least US$20 billion. Walmart Inc. slipped after China summoned Sam’s Club over food safety issues at brick-and-mortar stores and online shops. Robinhood Markets Inc rallied, with Piper Sandler analyst Patrick Moley citing the World Cup fuelling a prediction-market volume surge, writing that the soccer tournament was “like the Super Bowl but every day”.
See also: Nasdaq 100 falls 2% as chipmakers halt solid run
In deal news, Fox Corp agreed to acquire Roku Inc for US$160 ($205.06) a share in a cash-and-stock transaction that values the streaming video platform at about US$22 billion. The deal represents an 11% premium to Roku’s Friday close; shares had jumped 20% in anticipation of a sale.
In a development that will affect the AI industry, Washington took the unprecedented step of ordering Anthropic PBC to disable access to its most advanced AI platforms for all foreign nationals. The US government issued the order after discovering it’s possible to “jailbreak”, or bypass the guardrails, of the Fable 5 AI model Anthropic released just days prior.
The broader stock jump on Monday comes after the S&P 500 had already rebounded late last week as President Donald Trump signalled the possibility of an Iran deal. The benchmark closed Friday about 2% below its record high hit earlier in June.
See also: US futures waver as oil drops on Iran hope; SpaceX extends gains
The reduced threat of inflation comes at a crucial time, with interest-rate decisions due this week from the Fed and a number of other central banks.
Fed Chairman Warsh “will face a searing credibility test”, RSM chief economist Joseph Brusuelas wrote in a Monday note. “The supply shock unleashed by the war is still working its way through the economy, and the build-out of artificial intelligence infrastructure is creating its own supply chain challenges. Put another way, we have not yet reached a peak in inflation.”
Sectors in focus
- Energy stocks slumped while airlines rallied on the Iran deal. Shares in miners and cruiseline operators also gained.
- S&P 500 industrials hovered near a record high, which would also wipe out their war sell-off.
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