The U.S. stock market kicked off the week with record highs on Monday, as the S&P 500 and Nasdaq 100 reached new closing peaks. Investor sentiment was buoyed by anticipation of blockbuster earnings reports from technology giants Apple, Microsoft, and Meta. This optimism helped markets shrug off a significant rise in oil prices triggered by escalating geopolitical tensions in the Middle East.
Crude oil prices surged as President Donald Trump abruptly canceled peace talks with Iran, effectively closing the Strait of Hormuz. WTI crude for June delivery jumped 2.09%, while RBOB gasoline hit a 3.75-year high. The closure has removed an estimated 14.5 million barrels per day from global supply, according to Goldman Sachs, with the International Energy Agency reporting roughly 13 million bpd of production offline and damage to over 80 energy facilities. Despite a late proposal from Iran, U.S. concerns over control of the strategic waterway persist, keeping upward pressure on energy prices.
In the semiconductor space, Qualcomm's announcement of a collaboration with OpenAI and MediaTek provided a fresh boost to AI-infrastructure stocks. This development underscores the ongoing demand for chips powering artificial intelligence applications, a theme that has driven market leadership in recent months.
Intel shares have surged over 300% in the past year, driven by a strong turnaround and 7% revenue growth in Q1 2026, fueled by AI and data center segments. However, with a market capitalization of $427 billion and trading at 73 times forward earnings, analysts caution that future gains may be limited. The high valuation suggests much of the growth is already priced in, potentially capping returns to mid-single digits over the next five years. Investors seeking semiconductor exposure may look to alternative chip stocks with more attractive valuations.
In the energy sector, natural gas prices also moved higher, with December Nymex futures climbing 2.48% to a one-week high. Colder weather forecasts for late November and early December are expected to boost heating demand, while the Energy Information Administration reported a larger-than-expected storage drawdown of 14 billion cubic feet. Despite record-high U.S. dry gas production of 111.1 bcf/day, up 7.9% year-on-year, strong electricity output and weather trends are underpinning prices.
Foreign brokerages, including JPMorgan, HSBC, and Nomura, have downgraded India's equity market amid rising crude oil prices above $100 a barrel and geopolitical risks from the Strait of Hormuz. JPMorgan cut its Nifty 50 target by 10%, citing risks to growth and a weakening rupee. HSBC downgraded India to "underweight" due to potential demand slowdown and inflation spikes from higher energy costs. India's benchmark indices, the Nifty 50 and BSE Sensex, opened lower on Tuesday, dragged by sustained foreign institutional investor selling and elevated oil prices near $106-$110 per barrel.
Amid the volatility, analysts highlight long-term bargain opportunities in stocks like Microsoft and Micron Technology. Microsoft trades below its historical operating price-to-earnings ratio, supported by its Azure cloud platform powering AI models. Micron faces a supply-demand imbalance in the memory chip sector, with limited capacity and growing demand for high-bandwidth memory crucial for AI applications. These stocks offer potential for sustained growth driven by AI expansion and rising chip demand.
Middle Eastern dividend stocks, such as Emaar Properties (yielding 8.00%) and Emirates Insurance (7.89%), are showing resilience amid geopolitical tensions, offering investors a mix of stable income and growth prospects. The Gulf markets have risen recently despite U.S.-Iran uncertainties, supported by strong local fundamentals and government backing.
