Wall Street Brief (May 7): US stocks surged on Wednesday, with oil prices plummeting and positive earnings reports boosting market risk appetite; S&P 500 and Nasdaq hit new highs, semiconductor sector leads the rally, gold strengthens simultaneously

Summary: US stocks rebounded across the board on Wednesday, with the S&P 500 up 1.46%, Nasdaq up 2.02%, Dow Jones up 1.24%, and Russell 2000 up 1.47%. All four indices closed higher, with Nasdaq showing the strongest gain and hitting a new closing high, indicating that the day's trading was not just a defensive recovery but a reopening of risk budgets. The VIX closed at 17.39, up only 0.06% from the previous day, showing no further cooling in sentiment, but also no noticeable shift to euphoria. The most important pricing changes of the day were: first, expectations of an imminent US-Iran agreement weighed on oil prices as the market quickly shed energy risk premiums; second, AMD's strong earnings and outlook reinforced the bullish trend in AI infrastructure, driving a renewed expansion in tech leadership. On the market, technology and industrials led the gains, while energy came under significant pressure, Chinese stocks and crypto chains showed high volatility; in major asset classes, the dollar index fell 0.48%, gold rose 2.95%, crude oil dropped 6.30%, and Bitcoin gained 0.29%.

I. Major Events

1. Rising expectations for a US-Iran agreement weigh on oil prices

The market is pricing in expectations that the US and Iran are nearing a preliminary agreement, with the resumption of shipping through the Strait of Hormuz, causing a significant drop in crude oil prices. Local crude fell 6.30% on the day, XLE declined 4.12%, and XOP dropped 6.24%. After the rapid shedding of energy risk premium, risk assets regained room for expansion, with indices, growth, and small caps rising in tandem.

2. AMD reinforces positive outlook, AI infrastructure trade heats up

AMD reported quarterly earnings and delivered a stronger outlook, prompting the market to refocus attention on the AI infrastructure chain. Semiconductors and related tech sectors broadly strengthened, with SMH rising 5.18%, NVDA up 5.77%, and BOTZ gaining 2.92%. Technology not only continued to support the index but also reemerged as the strongest offensive direction of the day.

3. ISM services sector slows, Fed still emphasizes inflation risks

The April ISM Services PMI fell to 53.6, with the new orders index dropping to 53.5; on the same day, St. Louis Fed President Musalem noted that policy risks have increasingly shifted towards higher inflation. The coexistence of marginal growth slowdown and inflation constraints suggests that the day's rally was more about structural risk appetite recovery rather than a return to 'full-blown rate cut trading'.

II. Major Trends

The tech-driven trend continues to strengthen. Over a two-week period, QQQ rose 6.21%, significantly higher than SPY's 3.18% and DIA's 1.28%; over a three-month horizon, QQQ climbed 14.27%, while DIA remained nearly flat. Nasdaq's 2.02% rise on Wednesday indicates that tech-heavy stocks are back in active leadership.

Market breadth improved, but it is far from a full rotation. Over three months, SPY gained 6.55%, while RSP only increased by 1.71%; over two weeks, SPY rose 3.18%, compared to RSP’s 1.18%. Index highs remain largely driven by heavyweights, with internal dispersion improving only slightly.

Growth continues to outperform value. Over three months, SPYG surged 10.93%, significantly higher than SPYV’s 1.71%. Even as oil prices plummeted, reopening risk appetite, incremental capital still flowed preferentially into growth and technology, rather than defensive value plays. Small caps began to catch up, but their role remains secondary. The Russell 2000 rose 1.47% on Wednesday, showing risk appetite spreading outward; however, over a longer horizon, market dominance remains firmly in the hands of tech and large-cap growth.

III. Market Sentiment

The VIX closed at 17.39, up 0.06% for the day. Despite strong index gains and a sharp drop in oil prices, volatility did not continue to fall significantly, indicating that market sentiment is warming but has not reached a state of abandoning defensive awareness.

The CNN Fear & Greed Index rose to 68 from a previous reading of 67, remaining in the greedier zone. This aligns with Nasdaq hitting new highs, tech regaining leadership, and small caps strengthening simultaneously, suggesting that risk budgets are indeed expanding, though sentiment momentum is no longer sharply accelerating.

Changes in options were more direct. As of the Cboe 15:15 CT snapshot, the total Put/Call ratio stood at 0.58, with index options at 0.67 and equity options at 0.52. Protective positions, both at the index and individual stock levels, further declined from the previous session, indicating smooth risk absorption that day. However, the lack of a significant drop in the VIX also signals that geopolitical and inflation tail risks have not been fully ignored.

IV. Market Scan

1. Index ETFs:Index ETFs closed higher across the board, with QQQ leading the pack at 2.08%, followed by IWM at 1.50%, SPY at 1.39%, and DIA at 1.24%. The simultaneous strength in tech and small caps suggests that the day's rebound was not solely reliant on traditional heavyweights but reflected a renewed diffusion of risk appetite.

2. Industry sectors:Sector-wise, XLK led with a 2.66% gain, closely followed by XLI at 2.59%, while XLE lagged significantly with a 4.12% decline. After funds exited energy, they flowed back into tech and industrial chains, making the market's main theme clear. Among sub-sectors, semiconductors (SMH) surged 5.18%, copper mining (COPX) jumped 6.85%, and aerospace & defense (ITA) rose 3.74%, showing noticeable follow-through. Compared to simple sector rotation, this appears to be risk appetite continuing to spread along the semiconductor, resource, and industrial manufacturing chains.

3. Seven major tech companies:The seven major tech stocks showed overall strength, with NVDA leading the pack by rising 5.77%, followed by GOOG up 2.83%, TSLA gaining 2.40%, and NFLX with the weakest performance, up only 0.43%. Within the tech sector, there remains a stronger bias toward hardware, computing power, and high-growth areas rather than an across-the-board rise.

4. Chinese concept stocks:Chinese概念股 performed strongly overall, with BIDU surging 11.37% to take the lead, BABA rising 6.94%, FUTU gaining 6.86%, PDD up 5.75%, and JD increasing by 3.40%. This rally is not just driven by the main U.S. tech sector, but also supported by a recovery in sentiment toward Chinese technology stocks, which is adding incremental momentum.

5. Cryptocurrencies:Bitcoin edged up 0.29%, RIOT surged 16.46%, CRCL gained 6.66%, MSTR dipped slightly by 0.04%, and PLTR fell 1.56%. High-risk capital continues to favor cryptocurrencies and computing power-related stocks with fresh catalysts, though there is still clear differentiation within the sector, as not all stocks are seeing indiscriminate gains.

$S&P 500 Index (.SPX.US)$ $SPDR S&P 500 ETF (SPY.US)$ $NASDAQ 100 Index (.NDX.US)$ $Invesco QQQ Trust (QQQ.US)$ $Dow Jones Industrial Average (.DJI.US)$ $State Street® SPDR® Dow Jones Industrial Average® ETF Trust (DIA.US)$ $Russell 2000 Index (.RUT.US)$ $iShares Russell 2000 ETF (IWM.US)$ $Roundhill Magnificent Seven ETF (MAGS.US)$ $USD (USDindex.FX)$ $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $XAU/USD (XAUUSD.CFD)$ $SPDR Gold ETF (GLD.US)$ $CBOE Volatility S&P 500 Index (.VIX.US)$ $CME-Bitcoin RR Futures (MAY6) (BTCmain.US)$ $iShares Ethereum Trust ETF (ETHA.US)$ $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Meta Platforms (META.US)$ $Amazon (AMZN.US)$ $Alphabet-C (GOOG.US)$ $Microsoft (MSFT.US)$ $Apple (AAPL.US)$

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