Iran Nuclear Talks Hurdles, Nvidia Sell-off, US Stocks See Wild Swings and Flat Close

U.S. Stocks: Small-cap Stocks Outperform Against the Trend, Tech Stocks Drag the Market

The U.S. stock market had a "brutal" day. After a day of fluctuations, the S&P 500 and the Nasdaq closed flat, while small-cap stocks outperformed against the trend, leading to a significant short squeeze. Large-cap tech stocks, represented by the "seven giants," generally lagged behind the broader market, becoming the main force dragging down the indices.

NVIDIA's earnings report itself was not flawed. Peter Callahan, the chief analyst of Goldman Sachs' TMT, pointed out that the overall earnings report and conference call were solid, with the company announcing a new capital return plan, clarifying at least $20 billion in independent CPU revenue expectations for this year, and increasing the supply chain procurement authorization to $145 billion to ensure capacity growth. In addition, NVIDIA indicated that its market share in the cutting-edge AI computing power field continues to grow.

However, the stock price still fell. Callahan explained that NVIDIA's market value has exceeded 5.4 trillion dollars, and it just rose by 14% in April. At such a scale, a single quarter's earnings report is hard to generate significant stock price elasticity on the T+1 trading day — this has been the case for the past six or seven quarters.

The drag from Walmart is also not to be ignored. The company's overall performance basically met expectations, but the performance guidance disappointed the market and explicitly pointed out that the low-income consumer group is under pressure. This statement triggered violent fluctuations in the "low-income consumption" related sectors, which fell sharply during the day, and then recovered as oil prices retreated.

The quantum computing sector was a highlight of the day. The Wall Street Journal reported that the Trump administration is preparing to allocate $2 billion to nine quantum computing companies through the "CHIPS Act". Small-cap quantum computing concept stocks such as IonQ, D-Wave Quantum, and Rigetti Computing soared significantly, and IBM also strengthened simultaneously.

The VIX hit a new low since the outbreak of the Iran war, but the volatility of oil prices and bonds remains in a high alert range. Goldman Sachs trader John Flood warned that the short positions of U.S. macro products (indices + ETFs) in the current Goldman Sachs Prime book have risen to a ten-year high, even exceeding the level before the Iran ceasefire. Investors have strong hedging demand, but tend to avoid single stock shorts; the risk of short squeezes at the index level cannot be underestimated.

Oil Prices: Falling Below the $100 Threshold, Iran's Stance Adds to Uncertainty

The price of oil traced a "roller coaster" curve for the day. At the beginning of the day, Iran refused to give up its right to enrich uranium, causing oil prices to surge and break through the $100 threshold for a while. In the afternoon, as the "final draft" of the peace talks circulated, oil prices fell sharply back to the day's low.

It is worth noting that the draft did not mention the uranium issue at all, and the talks were extended for another seven days. At the end of the day, Iranian President Pezeshkian made a tough statement, saying Iran "will never back down," causing oil prices to rebound slightly, and the July WTI contract finally closed at a position slightly lower than flat.

From a technical perspective, the previous month's WTI contract has closed below the 50-day moving average for the second consecutive trading day, the last time this signal appeared was the phase low on April 17. Brent spot prices also fell, but only to a three-day low, the physical market supply remains tight, and the futures curve shows a steepening trend.