Tech Stocks Lead Positive Open as US-Iran Tensions Ease and Oil Prices Drop
The stock market is expected to open positively following sharp gains on Wall Street driven by major technology companies. Dual-listed chip stocks Tower Semiconductor, Camtek, and Nova are projected to rise by approximately 7.4%, 4.8%, and 2% respectively, with Palo Alto Networks also climbing about 3% ahead of its inclusion in leading indices this Thursday. Asian markets showed mixed performance this morning, with declines in South Korea and Hong Kong, while Shanghai edged up slightly. The chip sector remains under pressure globally, reflecting yesterday's struggles on Wall Street.
In Tel Aviv, trading began with declines amid the cancellation of a planned US strike on Iran and weakness in chip stocks abroad. The TA-35 index fell about 0.9%, led by a 2.5% drop in the biomedical and construction sectors. Tower Semiconductor is set to release its Q2 earnings today, with market consensus forecasting $455 million in revenue, a 22.2% increase year-over-year, and earnings of 67 cents per share. Despite a 30.7% drop from its June peak, Tower's stock has surged 78% since the start of the year.
In corporate news, Navitas Petroleum reported acquiring a 33% stake in the Tiberius and Logan oil and gas discoveries in the Gulf of Mexico, aiming to expedite development via its Lucius floating production unit. El Al Airlines benefited from falling oil prices, rising over 4%, ahead of its Q2 earnings release on Wednesday. Meanwhile, a labor dispute at Raffa Laboratories in Jerusalem caused its shares to decline.
On Wall Street, the Nasdaq jumped 2.1%, the S&P 500 rose 1.5% nearing an all-time high, and the Dow Jones hit a new record, buoyed by hopes of de-escalation between the US and Iran and strong US manufacturing growth. The technology sector led gains, with Alphabet, Amazon, Nvidia, Tesla, Meta, and Microsoft all advancing. Amazon surpassed a $3 trillion market cap for the first time following strong Q2 earnings. Conversely, Apple continued to decline after disappointing results, losing over 10% in four days and dropping to the third-largest company by market value.
In bond markets, US Treasury yields fell amid easing inflation concerns and geopolitical tensions. The 10-year yield dropped to 4.67%, while the 30-year yield decreased to 5.22%. The dollar-shekel exchange rate fluctuated but stabilized around 3.04 shekels per dollar. The Japanese yen strengthened following coordinated intervention with the US to curb volatility.
Looking ahead, major tech companies AMD and SpaceX are scheduled to report earnings after market close today. SpaceX shares have been volatile since its mid-June IPO, with analysts generally optimistic about its prospects. AMD faces pressure amid a weak chip sector but is expected to report strong data center growth. Federal Reserve officials signal cautious optimism on inflation, with potential rate hikes in September if inflation does not moderate. US manufacturing activity expanded at the fastest pace in over four years in July, supporting economic resilience.
Finally, the so-called "Magnificent Seven" tech stocks are seen as undervalued despite recent gains, with analysts suggesting potential for significant upside based on strong AI investment returns. This group includes Alphabet, Amazon, Nvidia, Tesla, Meta, and Microsoft, which collectively drove much of the market rally.