Buoyed by reports of significant progress in U.S.-Iran peace negotiations, the U.S. semiconductor sector saw broad gains in pre-market trading on Tuesday, with memory chip and AI-related stocks leading the advance. At the time of writing, Micron Technology was up over 6%, Advanced Micro Devices and Qualcomm rose more than 3%, Marvell Technology gained over 5%, while ARM Holdings and Taiwan Semiconductor Manufacturing advanced nearly 2%.
U.S. markets were closed on Monday for the Memorial Day holiday. Ahead of Tuesday's trading resumption, futures for the three major indices all moved higher, with Nasdaq 100 index futures climbing more than 1%. The primary driver for the improved market sentiment stemmed from signals of easing tensions in the Middle East. According to Iran's Tasnim news agency, Tehran is seeking to unlock approximately $24 billion in frozen overseas funds through the negotiations. U.S. Secretary of State Marco Rubio indicated an agreement could be reached within days, while former President Donald Trump also stated on social media that talks were progressing well.
Analysts note that a reported potential 60-day ceasefire agreement between the U.S. and Iran, expected to be finalized this week, includes plans to restore freedom of navigation in the Strait of Hormuz to pre-conflict levels 30 days after a deal is reached. This development has contributed to a continued retreat in international oil prices, with West Texas Intermediate crude briefly falling below the $90 per barrel mark.
The memory chip segment showed particularly strong performance. Micron Technology benefited not only from the improved macro sentiment but also from recent public praise by former President Trump. Concurrently, demand for AI infrastructure remains robust. UBS last week raised its year-end price target for the S&P 500 to 7,900 points, citing the seemingly insatiable demand for data center infrastructure as a core driver.
Investors should note that despite the optimistic negotiation outlook, minor skirmishes occurred between U.S. and Iranian forces over the weekend, indicating the situation remains fragile and market sentiment could reverse at any time.
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