Nasdaq climbs 2% as chip stocks rally on Hormuz mine-clearance talks

The Nasdaq Composite climbed 2.02% and the Philadelphia Semiconductor Index surged 6.18% after Iran signaled it may allow European mine-clearance in the Strait of Hormuz.

"The bond market is discounting something much more powerful: the deflationary impact of technological innovation, particularly artificial intelligence," Cathie Wood, chief executive of Ark Investment Management, said in a June post on X, a view that has underpinned investor appetite for chipmakers through the recent volatility.

Chip stocks led the advance. ARM Holdings rose more than 14%, Marvell Technology gained more than 12%, SanDisk climbed more than 10%, and Intel added more than 9%. Micron Technology rose nearly 8%, while AMD and KLA advanced more than 7%. Qualcomm and Broadcom gained more than 6%, NXP Semiconductors and Applied Materials rose more than 5%, and Texas Instruments added more than 4%. The Dow Jones Industrial Average rose 1.65% and the S&P 500 gained 1.43%.

The easing of geopolitical risk in the Strait of Hormuz, a chokepoint for about a fifth of global oil, pressured crude prices and lifted risk appetite across global equities. The rally reverses a selloff that had pushed the Philadelphia Semiconductor Index down more than 21% over the prior month, according to Zacks Investment Research, as investors weighed stretched valuations and concerns over AI-related financing.

The move coincided with reports that Iran is considering allowing European forces to clear mines in the waterway, a step that would ease the threat to tanker traffic and reduce the risk of a broader conflict in the Middle East. The development follows a period of heightened tension in which the U.S. maintained a blockade of Iranian oil shipments in the Persian Gulf and launched strikes against military targets in Iran, according to U.S. Central Command.

The geopolitical backdrop had weighed on equities in recent sessions. The S&P 500 slid to a one-month low and the Nasdaq 100 sank to a three-month low on July 29, when crude prices jumped more than 6% after Iran's Islamic Revolutionary Guard Corps said it targeted a U.S. airbase in Jordan. The 10-year Treasury yield, which had climbed to 4.665% as the Federal Reserve held rates steady at 3.50%-3.75% in a 9-3 vote, has since eased as oil retreated.

For investors, the chip rally carries broader implications. Semiconductor and AI-infrastructure stocks are set to contribute nearly 60% of the S&P 500's earnings-per-share growth in the second quarter, according to Bloomberg Intelligence forecasts, making the sector's direction central to index performance. Nvidia, whose forward price-to-earnings ratio has fallen to 17.53, its lowest since April 2015, remains a key bellwether, with its next earnings report scheduled for Aug 26.

The next catalyst for markets comes with the release of July jobs data and continued megacap earnings, which will test whether the AI-driven rally can sustain its momentum. Traders are also watching for further diplomatic progress on the Strait of Hormuz, where any renewed escalation could quickly reverse the risk-on tone.

This article is for informational purposes only and does not constitute investment advice.