Chip Stocks Rebound as Middle East Tensions Ease, While Asian Markets Decline

Market Overview

Easing tensions in the Middle East boosted investor risk appetite, driving a strong rebound in U.S. semiconductor stocks. The Philadelphia Semiconductor Index surged 5.6%, while Intel gained over 10% and Micron rose nearly 10%. The Nasdaq advanced 0.86%, the S&P 500 added 0.30%, and the Dow slipped 0.16%.

NVIDIA and SK Hynix announced a long-term partnership, while NVIDIA CEO Jensen Huang warned that memory shortages could persist for years, reinforcing memory as a critical AI infrastructure bottleneck. In contrast, Asian technology stocks came under pressure, with China's ChiNext Index falling 3.69%, the Shenzhen Component Index down 3.22%, and Japan's Nikkei 225 losing 3.49%.

Treasury yields continued to rise ahead of Wednesday's U.S. CPI report, with the 10-year yield climbing to 4.55% and the 30-year yield moving back above 5%.

Semiconductor Stocks Lead the Rally

The Philadelphia Semiconductor Index recovered sharply from Friday's selloff, rising 5.6%. Intel surged more than 10%, Micron gained nearly 10%, and AMD advanced over 5%.

Market sentiment improved after NVIDIA and SK Hynix unveiled a multi-year cooperation plan. Reports that Google may order more than three million TPU units also strengthened optimism surrounding AI infrastructure spending.

Meanwhile, NVIDIA is reportedly testing Intel's 18A manufacturing process, a potential milestone for Intel's foundry business and a sign of deeper collaboration across the semiconductor industry.

Middle East De-escalation Supports Risk Assets

Geopolitical concerns eased after Iran indicated its military response against Israel had concluded, while Israeli officials signaled a pause in operations. Reports of mediation efforts further improved market sentiment.

The VIX volatility index fell 12% to 18.9. Oil prices initially surged more than 5% before retreating. WTI crude settled 0.4% higher at $90.9 per barrel, while Brent crude rose nearly 1% to $94 per barrel.

Iran also reiterated its willingness to continue negotiations, reducing geopolitical risk premiums across global markets.

Memory Shortages Become a Key AI Theme

Micron's CEO described memory as one of the most overlooked constraints in AI development, while Jensen Huang warned that supply shortages could extend beyond 2026.

NVIDIA's decision to reduce memory configurations in its Vera Rubin systems reflects ongoing DRAM supply constraints rather than weaker demand. Tight supply conditions continue to support pricing across the memory supply chain.

Apple's AI Announcements Fail to Impress Investors

At WWDC 2026, Apple introduced major upgrades to Siri AI and Apple Intelligence and confirmed integration with Google's Gemini technology.

However, several AI features will not launch immediately in China and the European Union due to regulatory restrictions. Apple shares initially rose more than 3% but later reversed course and closed nearly 2% lower, highlighting investor skepticism over the company's AI strategy.

Market OutlookU.S. CPI in Focus

Wednesday's U.S. CPI report is expected to be the week's most important macro event. Some traders anticipate inflation could accelerate to 4.3% year-over-year, potentially strengthening expectations for a more hawkish Federal Reserve.

Rising Treasury yields suggest investors remain cautious, with the 10-year yield at 4.55% and the 30-year yield above 5%.

Divergence Between Asian and U.S. Tech Stocks

Asian semiconductor shares extended last week's selloff, while U.S. chipmakers staged a powerful rebound. The divergence reflects renewed confidence in AI-related demand and easing geopolitical tensions. Investors will be watching closely to see whether positive sentiment in U.S. markets eventually spreads to Asia.

Key Events to Watch

• China May financial data (TSF, new loans, and M2 money supply)

• U.S. April trade balance and May existing home sales

• EIA Monthly Short-Term Energy Outlook

• SpaceX pricing expected Thursday, with trading anticipated Friday amid debate over its reported $1.75 trillion valuation

• Reports suggest OpenAI and Anthropic are preparing for potential IPOs later this year