The sharp drop in crude oil prices should have been Monday’s biggest bullish catalyst for U.S. stocks, with WTI falling 7.5% in a single day—but this boost was completely overshadowed by the collapse in chip stocks. The Philadelphia Semiconductor Index plunged as much as 5% intraday, NVIDIA dropped nearly 5%, and Apple seized the opportunity to surpass it in market cap and reclaim the top spot. Memory chips were hit hardest: SK Hynix’s U.S. ADR fell below its IPO issuance price, and SanDisk lost $170 billion in market value within a month. The only bright spot of the day was Chinese equities, which rose 2.5% against the trend, with Xiaomi’s ADR climbing nearly 9%. Meanwhile, Trump continued hinting that the U.S. and Iran are in “deep negotiations,” but Saudi Arabia’s oil facilities appear to have been hit by another attack.
The three major indices showed mixed movements, and the sharp drop in oil prices failed to boost the broader market.
The S&P 500 rose 0.02% to 7,413.18. The Dow Jones Industrial Average increased 0.51% to 52,210.08. The Nasdaq Composite fell 0.18% to 24,932.081, while the Nasdaq 100 declined 0.32% to 28,039.211. The Russell 2000 rose 0.62% to 2,948.035. The VIX increased 0.48% to 18.67.
Apple surpasses NVIDIA to reclaim the title of world's most valuable company
The seven tech giants showed divergent performance: Apple rose 1.17%, Microsoft rose 1.94%, Google A rose 2.13%, while NVIDIA fell 4.99%, Tesla dropped 1.22%, Amazon declined 0.31%, and Meta fell 0.22%. Apple’s market capitalization climbed to approximately $4.93 trillion, while NVIDIA retreated to $4.78 trillion, resulting in a swap of market cap rankings. Apple’s stock has risen 24% year-to-date, and its steady capital expenditure strategy has unexpectedly made it a safe haven amid this wave of AI-related anxiety.
Storage chips plummet across the board, Chinese-listed stocks counter the trend to fill the gap
The Philadelphia Semiconductor Index closed down 2.23% at 11,554.88. TSMC ADR fell 1.03%, AMD dropped 5.17%, and ASML declined over 5%. The memory sector suffered particularly severe losses: Micron fell 2.25%, SK Hynix plunged as much as 10% intraday and closed below its U.S. IPO offering price, SanDisk tumbled over 11%, and Kioxia ADR slid more than 7%.
The immediate trigger for this sell-off came from across the ocean. On the same day, China’s memory chip manufacturer CXMT listed on the STAR Market, surging over 450% at open and briefly surpassing Intel in market capitalization. The market interpreted this as a sign that China’s progress toward self-sufficiency in DRAM was advancing faster than expected. Shortly after, reports emerged that Samsung Electronics was also considering sourcing DRAM from Chinese manufacturers to reduce costs. The combination of these two developments directly undermined the valuation logic of U.S.-based memory stocks.
However, most institutions are not that pessimistic; they generally believe that Micron, SK Hynix, and Samsung’s technological advantages in AI storage cannot be easily undermined in the short term, and this recent decline may ultimately benefit only those bold enough to step in.
Chinese stocks were among the few sectors to rise against the market trend today, with the Nasdaq Golden China Index climbing 2.51% to 6,257.87, nearing its 50-day moving average. Xiaomi ADR rose 8.97%, Baozun Inc. gained 12.8%, EHang Holdings increased 7.5%, NetEase rose 3.5%, and Pinduoduo, Tencent, and Alibaba all advanced more than 2%.
NVIDIA's revolving credit alert has been triggered
NVIDIA's decline that day had another reason: its credit default swap spread surged by 14 basis points in a single day, setting a record, as markets grew increasingly uneasy about its business model, which intertwines investment and guarantees.
NVIDIA has recently disclosed plans to provide up to $250 billion in financing guarantees for OpenAI’s data center project in Ohio, adding to its previous collaboration of over $500 billion with the SK Group. Within the entire AI infrastructure ecosystem, NVIDIA simultaneously assumes the roles of supplier, investor, and guarantor. This structure—where NVIDIA essentially places orders with itself and then backs them—has begun to raise concerns among investors that if any link in this chain falters, risks could rapidly propagate along the entire pipeline.
Goldman Sachs’ Chris Hussey offered a perspective attributing the past two months of stagnation in the S&P 500 to skepticism about whether investments in AI infrastructure can generate sustained profits, with oil prices and interest rates playing secondary roles. On that day, if all AI-related stocks were removed, the remaining portion of the S&P 500 actually rose 0.8%, outperforming the broader market—a figure that indirectly supports his view.
Conflicting signals on a ceasefire between the U.S. and Iran, as Saudi facilities come under attack again
Trump has publicly stated that the U.S. and Iran are engaged in "very serious negotiations," describing himself as patient and emphasizing that time is on their side. He claims the talks are focused primarily on reopening the Strait of Hormuz and reviving the nuclear deal. However, Iran’s official stance contradicts this entirely: Tehran has outright denied any ongoing negotiations and stressed that it will not allow the U.S. to unilaterally determine when the conflict begins or ends.
A key oil facility in Abqaiq, Saudi Aramco, appears to have been attacked and caught fire—a location whose strategic significance rivals that of the Strait of Hormuz—causing a noticeable tightening of market sentiment. Meanwhile, reports indicate that the Pentagon is concerned about the rapid depletion of U.S. military air defense interceptors in the Middle East, which objectively constrains the scope for further escalation by the U.S.
The Prime Minister of Israel has departed for Washington to discuss Iran with Trump in person; Trump himself has acknowledged that the two sides still differ on specific approaches.
Fed decision uncertainty surges as likelihood of a rate hike triples in one week
This week’s interest rate futures indicate that the probability of the Fed raising rates by 25 basis points at this meeting has risen to between 34% and 38%, up from around 13% just a week ago—a sharp shift in probability so close to the decision is uncommon.
Bloomberg’s Sebastian Boyd pointed out a contradiction: on one hand, officials’ statements have grown increasingly hawkish, with Logan and Harker issuing successive warnings about rate hikes, and理事Waller stating that risks in the U.S. have fully shifted; on the other hand, short-term inflation expectations have fallen to their lowest level in over a year, and long-term inflation expectations have continued to decline over the past few months—yet the feared secondary transmission effect of rising oil prices driving inflation has yet to materialize.
Earnings season enters its main phase, with the seven giants all reporting this week.
This week, approximately one-third of the S&P 500 by market capitalization will release earnings, including Microsoft, Meta, Amazon, and Apple. Chris Larkin of Morgan Stanley noted that geopolitical tensions and oil prices may be the biggest uncertainties this week; however, even if the Seven Giants deliver strong results, stock prices may not respond positively if market skepticism about AI spending persists.
JPMorgan’s team maintains a tactical bullish stance, believing that falling bond yields, a weaker dollar, and strong corporate earnings provide significant upside potential for the S&P 500; however, overcrowded semiconductor positions and the Iran conflict remain the biggest risks.
Article by: Tide Research