Nasdaq and S&P 500 Tick Up as Chip Stocks Make Gains, But Iran Conflict Hinders Momentum
Chip stocks gained momentum on Wednesday after climbing higher Tuesday thanks to promising forecasts and evidence of growth from chipmakers.
Quick overview
- The S&P 500 rose 0.2% and the Nasdaq Composite increased by 0.5% on Wednesday, driven by gains in semiconductor stocks.
- Concerns over ongoing conflicts between Iran and the U.S. are impacting stock market stability and contributing to volatility in oil and gas prices.
- The VanEck Semiconductor ETF saw a slight increase, while chip producers like ASML and Micron Technology reported positive forecasts after recent gains.
- Recent inflation data has raised hopes that the Federal Reserve may reconsider its plans for aggressive rate hikes.
The S&P 500 moved up 0.2% and the Nasdaq Composite added 0.5% on Wednesday thanks to climbing chip stocks while the Dow Jones remained flat.
Semiconductor futures picked up steam on Wednesday morning in premarket trading but were held back from their full potential by concerns about fighting between Iran and the United States. The two countries have been exchanging attacks now for five consecutive days.
VanEck Semiconductor ETF (SMH) inched up just over 1% and chip producer ASML raised its annual forecast as chipmakers continued gains made from Tuesday for the sector. Sandisk (SNDK) and Micron Technology (MU) also saw sharp gains on Tuesday after falling hard the previous day.
Iran Attacks Continue to Impact Stock Markets
The United States accused Iran of breaking the ceasefire agreement between the two countries when three ships were attacked on July 7th. Since then, the two powers have either been sending attacks to one another or talking about attacking. The conflict there has had a tremendous impact on stock market trading, the oil sector, and cryptocurrency markets.
The U.S. is actively working to stop attacks on commercial trading vessels, but oil and gas continue to climb sharply since early July. West Texas Intermediate is up to $79.67 per barrel- about 8% higher than early July prices. Brent crude oil is likewise on the rise, gaining 0.6% on Wednesday to reach $85 per barrel- around 10% higher than early July prices.
As gas and oil prices jump, stock futures are becoming more volatile. Chip stocks have swung between highs and lows in that period from early July up to now. Energy stocks have mostly climbed but saw their sharpest increases immediately after the ceasefire broke. Bitcoin (BTC) and the wider crypto market fell after July 7th but then swung back and forth between highs and lows since then as investors worried about the impact of conflict on risky financial assets like crypto tokens.
Markets are getting some help from the latest inflation reading, which was cooler than expected. The hope among many analysts is that the Federal Reserve will take that into account and issue rate cuts in the near future. The Fed previously planned to aggressively increase rates to compensate for climbing inflation, but that may no longer be necessary if the trend of lighter inflation continues.
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