Stocks are swooning, while crude oil is surging amid worries the US-Iran ceasefire is unraveling. Treasury yields and the US dollar are rising modestly, while gold and silver are falling. Cryptocurrencies are broadly weaker as well.
The last 48 hours have gone poorly in the Middle East. Iran struck multiple ships in the Strait of Hormuz in an effort to re-assert control over the oil shipping chokepoint. The US responded with airstrikes on Iranian air defense, radar, and command and control sites, prompting Iranian counterattacks on Kuwait and Bahrain.
USO, AAPL, AVGO, NVDA (YTD % Change)
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At the NATO summit in Turkey, President Trump said “I think it’s over” in regards to the ceasefire, adding that it has been a “waste of time” – spurring a jump in crude oil. But oil prices still remain well below their triple-digit peaks from a couple months ago. US WTI futures were recently trading around $74 a barrel, while Brent futures were changing hands near $78. They topped $112 and $114, respectively, at the height of the conflict.
Meanwhile, Apple Inc. (AAPL) announced a mega-deal with semiconductor supplier Broadcom Inc. (AVGO). The iPhone maker will spend more than $30 billion on various chips from Broadcom, which will expand a manufacturing facility in Colorado as part of the transaction. Apple and other tech companies are trying to curry favor with the Trump Administration by bringing more production back to the US.
Finally, one of the high-flying standard bearers of the AI stock boom is now looking…cheap. Nvidia Corp. (NVDA) has shed more than $1 trillion in market capitalization in just two months, leaving it trading at only 18 times forward earnings estimates. That’s a DISCOUNT to the S&P 500 Index (^SPX) multiple of 20, and the lowest in seven years. Capital has rotated into other AI plays, leaving NVDA behind.
