On the eve of the non-farm payroll report, oil prices surged, sparking inflation concerns. Chip stocks led the decline in the US stock market, US Treasuries fell for the fourth consecutive day, and the US dollar strengthened.

Middle East geopolitical tensions push oil prices sharply higher, sparking investor concerns about runaway inflation, with U.S. Treasury bonds falling for the fourth consecutive day. Fear of inflation also spreads to the stock market; combined with news about chip export licenses, chip stocks decline collectively, dragging major indices lower across the board.

On the eve of non-farm payrolls, on Thursday, the U.S. stock market’s S&P 500 index fell 0.6%, breaking below the key 100-day moving average. The Dow led the decline among the three major U.S. stock indices, dropping 1.6%. The Nasdaq 100 also declined by 0.3%.

First Financial reports that the U.S. plans to expand AI chip export controls globally, requiring licenses for companies like Nvidia and AMD. The semiconductor sector came under pressure, with U.S. stocks in the sector dropping over 3% intraday. AMD fell 1.3%. Nvidia recovered from its intraday decline to close up 0.16% after a volatile session.

Data shows that, in a low-layoff environment, unemployment benefit claims have stabilized near their lowest levels in nearly a year. Analysts expect the non-farm payroll report due on Friday to show that, after strong growth in January, hiring slowed last month, with the unemployment rate remaining stable.

JPMorgan’s Andrew Tyler said:

“Given rising energy prices boosting inflation expectations, the stronger the data, the better. Weak data would push up expectations for rate cuts, but there is a risk of stagflation in the short term.”

News that OpenAI is abandoning checkout services for shopping platforms triggered buy orders in Goldman Sachs’ “AI Disruption Risk” portfolio, which saw its stocks rise over 2%.

Software stocks continued their recent rebound, with North American tech software ETFs rising 2.27%.

As U.S. and Israeli military actions against Iran enter the sixth day, Iran’s Revolutionary Guard threatened to block the Strait of Hormuz. WTI crude oil surged as much as 8%, breaking $82 and reaching a new high since July 2024.

However, Wall Street Journal reports that, late in the session, the Trump administration hinted at resolving the oil price issue, causing WTI and Brent crude to quickly retreat, though U.S. oil still rose 3% to $79. The surge in oil prices directly raised inflation expectations, with the 10-year U.S. Treasury yield rising 4.2 basis points for the fourth straight day.

Chris Sneyak of Wolf Research said:

“If oil prices stay high, the 10-year Treasury yield will likely face upward pressure.”

The dollar rose as much as 0.6 amid liquidity demand. The Australian dollar plummeted 1.24%, falling nearly 100 points intraday. Bitcoin, under dual pressure from risk aversion and liquidity tightening, declined nearly 3% to around $71,000.

Gold fell 1%, silver dropped 1.58%. Analysts believe that in the context of a strong dollar and rising real interest rates, the appeal of non-yield assets diminishes.

On Thursday, U.S. stocks declined across the board, with the Dow dropping nearly 800 points, small-cap stocks falling 2%, leading the major benchmarks lower. The semiconductor sector declined 1.2%. Nvidia recovered from its intraday lows to close up 0.16%.

Major U.S. stock indices:

• S&P 500: down 38.94 points, 0.57%, at 6,830.56
• Dow Jones Industrial: down 785.22 points, 1.61%, at 47,954.74
• Nasdaq: down 58.49 points, 0.26%, at 22,748.99
• Russell 2000: down 1.91%, at 2,585.57

U.S. sector ETFs:

• Industrial Select Sector ETF: down 2.2%, leading sector declines
• Consumer Discretionary ETF and Healthcare ETF: down about 2%
• S&P Oil & Gas ETF: up 1.88%
• Energy Select Sector ETF: up 0.53%
• Consumer Discretionary Select ETF: up 0.11%

The Magnificent 7 tech giants:

• Slight decline of 0.05%
• Nvidia recovered to close up 0.16%
• Microsoft: +1.35%
• Amazon: +0.98%
• Tesla: -0.10%
• Google A: -0.74%
• Apple: -0.85%
• Meta: -1.07%

Chip stocks:

• Philadelphia Semiconductor Index: down 1.17%, at 7,821.76
• TSMC ADR: down 0.97%
• AMD: down 1.30%

European markets closed down about 1.3%, with the blue-chip index falling 1.60%.

Pan-European STOXX 600: down 1.29%, at 604.83

Eurozone STOXX 50: down 1.52%, at 5,781.50

Major national indices:

• Germany DAX 30: down 1.61%, at 23,815.75
• France CAC 40: down 1.49%, at 8,045.80
• UK FTSE 100: down 1.45%, at 10,413.94

On the sixth day of U.S.-Israeli military actions against Iran, Iran’s Revolutionary Guard threatened to block the Strait of Hormuz. WTI crude oil surged as much as 8%, breaking $82.

Crude Oil:

• WTI crude surged 8%, surpassing $82, reaching a new high since July 2024. Later retreated slightly after the Trump administration hinted at resolving the issue but still closed up 3% at $79.

(Raw WTI futures)

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