The global market meltup is rolling on. US stock futures inch higher, but are off session highs, with oil falling for a third straight day as traders waited for updates on a potential US-Iran peace deal that would reopen oil flows through the Strait of Hormuz. As of 8:00am ET, S&P and Nasdaq futures were 0.1% higher, after the benchmarks notched back-to-back record highs. In premarket trading, most Mag 7 stocks were higher although Arm Holdings dropped 8% after the chip company reported weak fourth-quarter royalty revenue, hurt by sluggishness in the smartphone industry; the company warned about weaker demand for lower-end phones due to higher memory cost. Whirlpool plunged 18% after the household appliance manufacturer cut its revenue forecast for the full year, missing the average analyst estimate. Overseas indexes are also rising, bolstered by stocks tied to artificial intelligence. Japan’s Nikkei 225 was a particular standout, climbing 5.6% after an 18% rally in Softbank shares. Brent traded near $99 a barrel, extending a 12% slump in the two prior sessions on mounting confidence that an agreement in the Middle East is within reach. The dollar headed for its worst week in a month. Global bonds continued their advance as inflationary pressures receded. Today's US economic data calendar slate includes 1Q preliminary nonfarm productivity and jobless claims (8:30am), March construction spending (10am), April New York Fed 1-year inflation expectations (11am) and March consumer credit (3pm). Fed speaker slate includes Hammack (10am, 2:05pm), Daly (12:30pm), Kashkari (1pm) and Williams (3:30pm)

In premarket trading, Mag 7 stocks are mostly higher (Tesla +1.7%, Alphabet +1.1%, Nvidia +0.1%, Microsoft +0.7%, Amazon +0.3, Meta Platforms +0.02%, Apple -0.1%).

Elsewhere in AI, Anthropic signed an agreement with Elon Musk’s SpaceX to access computing resources from a large SpaceX data center. Anthropic’s CEO said his company is “working as quickly as possible” to secure more computing resources after experiencing “80x growth” in annualized revenue and usage in 1Q.

An ongoing slide in oil prices is helping to lift investors’ mood, with Brent crude futures trading below $100 a barrel this morning. The U.S. and Iran are getting closer to restarting talks to end the war and reopen the Strait of Hormuz, with discussions possibly resuming as early as next week in Islamabad. While the US is waiting on Iran to respond to its proposal which sent stocks surging yesterday, and it’s unclear whether they’ll accept. But stocks have largely focused on a solid earnings season and the tech trade anyway. The inverse relationship between stocks and oil prices is “long gone,” wrote Bloomberg Opinion columnist John Authers. The resumption of shipments through Hormuz would also reduce risks around the economic impact of the war. US Treasury yields are retreating for a third straight session alongside the dollar, which is now trading lower than when the war began.

“Even though there is not yet a final peace agreement, markets are clearly pricing in a meaningful step forward toward a resolution,”said Francisco Simón, head of investment strategy at Santander Asset Management. “The key point is that this reduces the probability of the most negative scenarios, particularly those involving a more prolonged shock to global growth.”

That said, there are clear signs of mania: the SOX chip index is now up more than 60% this year - a parabolic move that suggests “we are in semi-irrational chase mode,” Goldman Delta-One head Richard Privorotsky warns. Meanwhile, in a sign the entire market has become one giant gamma squeeze,the S&P traded a record $2.6 trillion notional of calls yesterday..

...with almost 60% of every SPX option yesterday traded a call.

There are a few signs of the rally broadening out, with the S&P 500 equal-weight index closing at a record for the first time since late February. But there’s really just one trade in town, with the SOX hitting new records almost daily.“Until supply normalizes, the market can continue to justify increasingly large numbers across the ecosystem, although the obvious risks are building,”Goldman partner Privorotsky wrote in a note.

The global chip euphoria helped South Korea’s stock market to overtake Canada’s, and is boosting niche firms around the world, with Sweden’s Silex Microsystems having the strongest first day of trading for a sizable European IPO in almost five years. Still, there may be a limit — after more than doubling in value this year, ARM shares fell after it warned of sluggishness in the smartphone industry.

In eco data, planned job cuts continued to mount in the tech sector last month, even as overall private-sector layoff announcements receded, according to Challenger data. And consumer sentiment remains closely watched. Costco’s April comparable sales rose 11.6%, aided by 3.2% gas-price inflation. Whirlpool cut its revenue forecast, noting North American industry demand reached recession-level lows.

Source: ZeroHedge News