Author: Tide Research
Over the weekend, the US-Iran agreement has already begun to falter. Iran's IRGC announced the closure of the Strait of Hormuz on Saturday, and the negotiation delegation walked out angrily on Sunday after Trump issued threats. The US-Iran talks in Switzerland are currently still suspended. US stock futures for the three major indices were all lower in pre-market trading, with geopolitical risk premiums starting to accumulate again. The direction of the negotiations is the most immediate pricing variable for today's market open.
Market Performance
Last week, chip stocks were the main theme. The Philadelphia Semiconductor Index hit a record high on Thursday, overshadowing the hawkish FOMC with the US-Iran deal signing. The S&P 500 gained 0.9% for the week. SpaceX finished its debut week up 37%, but ended with two consecutive down days; a $20 billion bond issuance plan was revealed, indicating its honeymoon period is over. Accenture plunged 18% on Thursday, making it the worst-performing large-cap blue-chip last week.
Macro & Outlook
Latest status of US-Iran talks: The Strait of Hormuz remains closed. The Iranian delegation left the venue on Sunday in protest of Trump's threatening remarks. US media reports indicate Iranian personnel are still in contact with the US, but talks are effectively suspended. Iran's condition is for Israel to halt military operations in Lebanon, while Trump publicly warned of potentially taking over the Strait to collect tolls and threatened more severe strikes. Both sides are applying pressure. Progress in negotiations before today's market open is the most direct pricing variable for oil and energy stocks.
Marvell and Flex are added to the S&P 500 effective Monday. Most passive fund weight alignment was completed by last Friday's close. Today's open will see residual position adjustments; watch for liquidity premiums in the first few minutes for these two stocks.
MSCI's annual market classification review is announced Tuesday. If South Korea enters the watchlist for developed markets, billions in passive funds could flow into semiconductor ETFs. SK Hynix ADR application is expected to receive SEC approval as early as this week. Both events share a beneficial direction, likely creating a resonance effect in the memory sector.
Thursday, June 25th is the heaviest day of the week, with May PCE and Micron's earnings report landing on the same day. Core PCE is expected to rise year-over-year from 3.3% to 3.4%. Deutsche Bank already predicts two rate hikes totaling 50 bps this year, with the first potentially in July. If PCE data comes in hot, a September hike moves from probability to consensus, giving the hawkish Waller a data-backed boost; if it softens, the repricing of rate cut expectations could be faster than anyone expects.
Micron's earnings are the most direct litmus test for the AI narrative this week. Wall Street currently expects Q3 revenue around $34.5B, EPS around $19.72, and gross margin around 81%. Its full-year HBM capacity is reportedly locked by customers through late 2026 and into early 2027. The market is most focused this time on 2027 HBM supply visibility, HBM4 mass production ramp progress, and whether Micron can maintain its share in Nvidia's Vera Rubin supply chain. Micron has confirmed being included as a certified HBM4 supplier for Vera Rubin, the biggest narrative upgrade last quarter. Any language suggesting capacity constraints or conservative guidance will be amplified by bears, as the Philly Semiconductor Index just hit a record high, leaving little room for error.
Nvidia's annual shareholders meeting is held at Beijing time early morning. Blackwell and Vera architecture ramp-up is the core focus; any below-expectations commentary will directly impact the AI capital expenditure narrative. OpenAI's GPT-5.6 is expected to debut this week, evolving from model to executable Agent. If its timing overlaps with Micron's earnings and Nvidia's meeting, Thursday will be the most intensive 24 hours for the AI narrative this week.
The Russell Reconstitution takes effect at Friday's close, systematically raising volatility for small-cap stocks.
Tide's Perspective
Last week's answer was temporary; this week is the real test for the pricing framework. Two lines are running simultaneously: the geopolitical line watches if US-Iran talks can restart, and the AI line watches Micron's guidance and Nvidia's capacity. Chip stocks hit a record high last week. Whether this level can hold depends on the outcome of two key reports landing simultaneously on Thursday. Deutsche Bank has already capitulated to Waller, predicting 50 bps of hikes within the year. If PCE comes in hot again and Micron offers conservative guidance, last week's biggest gainers could become this week's deepest decliners. If both deliver the answers the market wants, the pricing framework for the AI narrative will be re-established, and this week's volatility will present an entry window.
