Epic surge in the early morning! Major news from the Strait of Hormuz

U.S. chip stocks stage an epic surge.

Last night and this morning, driven by strong employment data and the AI (artificial intelligence) chip trading frenzy, the Nasdaq and S&P 500 indexes hit new all-time highs again, with the Philadelphia Semiconductor Index soaring over 5%, and several chip giants surging over 10%, collectively reaching record highs. Some analysts warn that the rally in U.S. stocks is increasingly concentrated among a few giants, with overall breadth continuing to deteriorate. If the market’s dominant style suddenly shifts, momentum strategies could face a heavy blow.

The latest developments in the Strait of Hormuz are also drawing market attention. According to CCTV News, sources say the situation around the Strait of Hormuz is currently calm. Additionally, Iranian media report that Iran is drafting legislation related to the Strait of Hormuz.

U.S. chip stocks explode

On May 8, Eastern Time, the U.S. stock market strengthened across the board. By the close, the Nasdaq rose 1.71%, the S&P 500 increased 0.84%, and the Dow Jones barely edged up 0.02%. The S&P 500 has gained 2.33% this week, and the Nasdaq has surged 4.51%, both achieving six consecutive weeks of gains.

Most large tech stocks rose, with Tesla and Broadcom jumping over 4%, Apple up more than 2%, Nvidia up over 1%, and Google and Amazon closing slightly higher; Microsoft and Meta fell more than 1%.

Overnight, the main focus in the U.S. stock market remained on the chip sector, with the Philadelphia Semiconductor Index soaring over 5%, bringing its year-to-date increase to 66.25%. Micron Technology surged over 15%, Intel jumped over 13%, AMD rose over 11%, Qualcomm increased over 8%, Marvell Technology and Applied Materials both gained over 6%, and ASML ADR rose over 4%.

The storage sector also saw significant gains, with SanDisk soaring over 16%, Western Digital up over 3%, and Seagate Technology up over 2%.

The latest data from the U.S. Bureau of Labor Statistics shows that April non-farm employment exceeded expectations, with the unemployment rate holding steady at 4.3%, demonstrating resilience in the labor market despite energy shocks. Chris Zaccarelli of Northlight Asset Management said the economy is performing much better than pessimists suggest. Despite multiple headwinds such as high oil prices, sticky inflation, and prolonged high interest rates, the job market continues to add positions.

Money market pricing indicates the Federal Reserve is likely to hold steady this year. Morgan Stanley Wealth Management Chief U.S. Economist Ellen Zentner said that strong employment data support the Fed’s current stance—wait and see, focusing on inflation. Rate cuts are not on the agenda in the short term.

Lindsay Rosner of Goldman Sachs Asset Management also pointed out that strong data and inflation pressures have essentially eliminated the possibility of recent easing, but this judgment could change with developments in the Middle East and energy prices.

Regarding this round of strong U.S. stock rebound, Bloomberg strategist Michael Ball noted that the rebound has clear mechanical features: early in the war, institutional positions were generally low; as stock prices rose and volatility declined, forced buying created a self-reinforcing positive feedback loop—higher prices, lower volatility, increased demand for bullish options, and cycle repeats.

Nomura characterized this phenomenon as a “crash-up,” essentially a pro-cyclical passive leverage buy-in, not a fundamental-driven bull market.

From a valuation perspective, the components of the Philadelphia Semiconductor Index currently have a P/E ratio of about 24.4, below the peak of 30.4 in 2024, but based on price-to-sales ratio, valuations have hit a record high.

The “big short” betting against U.S. tech, Michael Burry, said on Friday: “Stocks are not rising or falling because of employment or consumer confidence. They are rising because they are already rising. Based on the two words everyone thinks they understand (AI), it feels like the last few months before the bubble (burst) in 1999–2000.”

Iran drafting legislation related to the Strait of Hormuz

On the morning of May 9, according to Xinhua News Agency citing Iran’s Tasnim News Agency on the 8th, Iran is drafting legislation related to the Strait of Hormuz.

The chairman of Iran’s Parliament National Security and Foreign Policy Committee said that the parliament has held multiple meetings with the Foreign Ministry, Ports and Maritime Organization, and other relevant agencies to discuss the draft. Once the parliament reconvenes, the draft will be immediately submitted for review.

According to CCTV News, on the 8th local time, a military source in Iran said that the situation around the Strait of Hormuz is currently calm, but if the U.S. again enters the area and causes trouble for Iranian ships, conflict could occur.

In the afternoon of the 8th, the Iranian Islamic Revolutionary Guard Corps announced that earlier that day, Iranian armed forces engaged in “sporadic clashes” with U.S. warships in the waters of the Strait of Hormuz.

UN Secretary-General Guterres’ deputy spokesperson Hack said on the 8th that Guterres calls on the U.S. and Iran to exercise maximum restraint to avoid further escalation.

During a routine press conference that day, Hack responded to questions by saying that Guterres is concerned about the firefight incidents in the Strait of Hormuz. The Secretary-General emphasized that this is a critical moment for de-escalation, and urged all parties to exercise maximum restraint to prevent further escalation.

Hack also called on all sides to fully comply with the ceasefire agreement and avoid actions that could lead to renewed conflict or undermine current diplomatic efforts.

According to Iran’s Tasnim News Agency early on the 8th, the spokesperson for Iran’s Hatem Ansar Central Headquarters said that due to U.S. violations of the ceasefire agreement, including attacks on Iranian oil tankers and another vessel entering the Strait of Hormuz, Iranian forces struck U.S. warships east of the Strait of Hormuz that night. U.S. Central Command confirmed that a U.S. destroyer was attacked and said it retaliated, but the U.S. has no intention of seeking escalation.

Dongcai infographic · adding some dry goods

(Article source: Securities Times)