Wall Street surged to LTH on AI and Iran deal optimism
·
Under Trump, from trade to the Iran war, both Wall
Street and Main Street are vulnerable to Trump’s morning moods & truths and
nonstop media bytes & spams.
·
Trump is under immense media, public, and political
pressure for an early face-saving exit from his Iran war mess.
· Ahead of the Nov '26 midterm election, Trump has to
bring down the price of oil, and thus he has to first offer concessions to Iran
to reopen the Strait of Hormuz.
Wall Street is surging and making LTH (Lifetime High) almost every other day on AI and Iran deal/war optimism. The US is the biggest
beneficiary of both the Iran and Ukraine wars, as it’s the biggest producer of
both oil and military equipment. These wars and never-ending geopolitical
tensions are also acting as a fiscal stimulus for the US economy post-COVID.
Both Wall Street and Main Street, in terms of higher industrial (military
equipment) production, defense & other industrial stocks, surged. This, along
with ongoing AI optimism, is making Wall Street's new lifetime high almost
every other day in May after a brief correction in February and March.
The broader SPX-500 soared around +15% in April and
May after a correction of around -6% in February and March. The industrial
heavy blue-chip DJ-30 gained almost +10% after a fall of -5% in March. Tech-heavy
NQ-100 surged almost +26% in April and May after a loss of -7% in February and
March. Wall Street boosted after Trump announced the Iran war in early April.
Tech stocks led the charge, underscoring the market’s continued faith in AI as
a transformative force, while oil stocks boosted on higher oil prices.
Market
Performance and Sector Leadership on June 1
Trading began with caution as investors monitored
developments in U.S.-Iran negotiations and reacted to elevated oil prices
stemming from regional instability. However, by midday, buying interest
intensified, particularly in technology and AI-related names. The tech sector
rose approximately 2.5%, significantly outpacing the broader market and lifting
the major averages to new peaks.
NVIDIA (NVDA) emerged as the standout performer,
surging 6.3% after unveiling its groundbreaking RTX Spark Superchip at Computex
2026 in Taipei. This Arm-based superchip pairs Blackwell GPU technology with a
Grace CPU, delivering up to 1 petaflop of AI performance. Designed for
high-performance AI PCs and laptops, it targets the consumer and enterprise
markets with features like unified memory up to 128GB, advanced ray tracing,
DLSS, and support for personal AI agents. NVIDIA
positioned the RTX Spark as a reinvention of the Windows PC, shifting devices
from tools to intelligent teammates capable of local AI reasoning.
The announcement rippled positively across the
ecosystem. Microsoft rose 2.3%, benefiting from synergies in Windows AI
integration. Oracle jumped 9.9% on hyperscaler and enterprise AI demand.
Hardware names followed suit: Micron Technology climbed 6.6%, and Dell
Technologies advanced 10.8%, reflecting expectations of upgraded PC demand
driven by AI capabilities.
IBM provided another notable story, soaring roughly
7.6% to 10% intraday after an old video of President Trump resurfaced. In the
December 2025 clip, Trump praised IBM CEO Arvind Krishna, calling the stock a
“very nice price” and lauding the company’s progress. The viral moment added
momentum to IBM’s already strong run, supported by quantum computing
initiatives and AI software strength.
The
AI Narrative: From Hype to Structural Shift
The surge reflects deeper structural trends. AI
infrastructure spending remains robust, with companies like Nvidia, Microsoft,
and Oracle positioned at the forefront. NVIDIA’s RTX Spark announcement extends
the AI boom beyond data centers into personal computing, promising widespread
adoption of AI agents, enhanced gaming, and content creation for consumers.
This “AI everywhere” theme has driven concentration in mega-cap tech, with the
top 10 stocks now representing a significant portion of the S&P 500’s market
cap. While this raises questions about market breadth, strong earnings and
forward guidance have justified valuations for many investors. The May 2026
rally, which saw the S&P 500 post substantial gains, continued into June,
highlighting sustained investor appetite for innovation-led growth.
Broader market context includes anticipation for
upcoming data, such as jobs reports and corporate earnings from names like
Broadcom. Despite higher oil prices potentially feeding into inflation
concerns, the Fed’s less hawkish policy path and corporate adaptability have
kept sentiment constructive; the Fed may be on hold in 2026, despite some
market participants assuming a rate hike.
Energy shares also participated in the upside as
oil prices rose on supply concerns tied to the Strait of Hormuz. Exxon Mobil
gained 2.5%, and Chevron advanced 1.9%. While nine of eleven S&P 500
sectors finished in the red or flat, the concentration of gains in a handful of
high-profile tech names was sufficient to push the indexes higher.
US-Iran
Negotiations: A Volatile Backdrop Since May 1, 2026: Geopolitical developments have played a crucial
supporting role. Since early May, U.S.-Iran talks have been characterized by
volatility, alternating between optimism and setbacks, centered on extending a
fragile ceasefire, reopening the Strait of Hormuz, and addressing Iran’s
nuclear program.
Early
May: Iran submitted
proposals via mediators, often Pakistan. President Trump rejected several as
insufficient, reviewing military options while maintaining diplomatic channels.
He described some offers as “weak” or “totally unacceptable.”
Mid-May: Trump characterized talks as “very good” at points
and paused potential strikes at the urging of Gulf leaders. Iran demanded
sanctions relief and security guarantees. A temporary two-week ceasefire was
referenced in discussions.
Late
May (May 24–28): Progress
toward a memorandum of understanding (MOU) emerged, aiming for a 60-day
ceasefire extension, Hormuz reopening, and deferred nuclear talks. Trump edited
drafts to strengthen terms on uranium enrichment and access. Vice President JD
Vance noted the sides were “very close.” Reports indicated indirect talks via
multiple channels.
May
29–31: Trump held high-level meetings and proposed further changes. Iranian officials
expressed skepticism, citing distrust and external factors like regional
actions. Conflicting signals emerged, with some Iranian media suggesting halts
in discussions.
June
1–2: President Trump
stated on Truth Social and in interviews that “Talks are continuing, at a rapid
pace, with the Islamic Republic of Iran.” He downplayed breakdowns while
insisting on core demands: preventing nuclear weapons capability, addressing
highly enriched uranium, and ensuring full Hormuz access. Iran emphasized
verifiable benefits before major concessions.
Trump
says talks with Iran continuing at 'rapid pace': Talks are continuing at a rapid pace with the
Islamic Republic of Iran.
No final agreement/MOU has been signed, but markets
interpreted Trump’s comments as constructive. Earlier, Iran threatened due to
Lebanon-Israel issues and the continuing US naval blockade.
Trump
expects an Iran ceasefire deal within a week, i.e., by the 2nd week
of June.
Trump said he believes Washington and Tehran will
reach an agreement within the next week to extend their ceasefire and reopen
the Strait of Hormuz: “I think we'll have an agreement over the next week,”
Trump told ABC News hours after Tehran said it would halt indirect negotiations
with Washington over continued Israeli operations against its allied armed
group Hezbollah.
Trump
says he does not care if Iran negotiations are over—CNBC.
On Monday, Trump told CNBC when asked about reports
that Iranian negotiators would stop communications with the United States over
Israel's military operations in Lebanon. Trump said he did not care if peace negotiations
with Iran were over: "I don't care if they're over, honestly—I really
don't care. I couldn't care less," he added. Trump said he was "going
to ask Israeli Prime Minister Benjamin Netanyahu what's going on
with Lebanon." He also said he was not worried about oil prices after
Iranian state media reported that Tehran was vowing to "completely
block" the Strait of Hormuz, along with other similar channels. "I
think the oil will be dropping like a rock in the very near, you know, the very
near distance," Trump said.
Trump
erupted at Netanyahu over Lebanon escalation—Axios.
Axios has published an explosive account of what it
says was a heated phone call between President Donald Trump and Israeli Prime
Minister Benjamin Netanyahu, with the US president reportedly lashing out over
Israel's military escalation in Lebanon. According to Axios, Trump was furious
that Israeli operations against Hezbollah risked derailing ongoing diplomacy
with Iran and undermining efforts to preserve a fragile regional ceasefire.
"You're fucking crazy. What the fuck are you
doing?" Trump told Netanyahu, according to the report, after learning of
Israeli military actions in Lebanon. Axios reported that Trump also referenced
Netanyahu's ongoing legal troubles during the call, reminding the Israeli prime
minister that he had publicly defended him and sought to help him politically. Axios cites
a US official summarizing Trump’s message to Netanyahu as follows: “You’re
fucking crazy. You’d be in prison if it weren’t for me. I’m saving your ass.
Everybody hates you now. Everybody hates Israel because of this.”
While US officials tell the news site that Trump is
aware that Hezbollah has been firing repeatedly at Israel and that Jerusalem
has a right to respond, he believes that the IDF has responded
disproportionately in recent days, risking Washington’s efforts to secure a
ceasefire extension with Iran, which is conditioning a deal on a truce in
Lebanon. Trump “steamrolled” Netanyahu on the call, and “Bibi said, ‘OK, OK,
just make sure everything is taken care of,'” the US official tells Axios.
US officials are also quoted as saying that Trump
told Netanyahu that he has kept him out of prison, a reference to Trump’s
repeated public demand that President Isaac Herzog pardon the prime minister,
who is in the midst of a lengthy corruption trial.
Trump
officially posted on his Truth Social:
I
had a very productive call with Prime Minister Bibi Netanyahu of Israel, and
there will be no troops going to Beirut, and any troops that are on their way
have already been turned back. Likewise, through highly placed representatives,
I had a very good call with Hezbollah, and they agreed that all shooting will
stop—that Israel will not attack them, and they will not attack Israel.
President DONALD J. TRUMP
The IRGC warns of new fronts and Bab el-Mandeb disruption, and oil got a boost.
The IRGC Quds Force commander warned that continued
Israeli military operations in Lebanon and Gaza could trigger a broader
response from Iran-aligned groups across the region. In remarks carried by Fars
News, Qa'ani said Israeli “aggression” in Lebanon and Gaza, carried out with US
support, would strengthen the resolve of the “Axis of Resistance” to expand its
backing for allied groups and activate additional fronts. He also warned that
developments could lead to what he called the “equalization” of traffic
conditions in the Bab el-Mandeb Strait and the Strait of Hormuz, suggesting
that disruptions affecting one strategic waterway could be mirrored in the
other. The Bab el-Mandeb Strait, linking
the Red Sea to the Gulf of Aden, and the Strait of Hormuz are among the world's
most important maritime chokepoints for energy shipments and international
trade.
In
his Congressional testimony on June 2, US Secretary of State Rubio said
· Iran
would not receive sanctions relief simply for reopening the Strait of Rubio,
says the US, which remains in talks with Iran.
·
Washington
remained in talks with Iran, and there was a prospect that Tehran had agreed to
discuss aspects of its nuclear program it had previously refused to address.
·
Iran
still had many drones, but its conventional shield had been substantially
eroded. Hormuz.
·
Any
sanctions relief would be condition-based.
Iran
is still reviewing the final text of a possible MOU with the US.
As
per the latest update,
Iran is still reviewing the final text of a possible memorandum of
understanding (MOU) with the US and has not yet sent a response, semi-official
Mehr News reported on Tuesday, citing an informed source. “America’s record of
breaking commitments and historical mistrust has led Iran to take a very strict
approach to the issue,” said the source, described as close to Iran’s
negotiating team. The source also said Iran was seeking “real benefit” based on
experience.
But
another report by an IRGC outlet (FARS Agency) indicates that the Iran-US talks
channel paused for several days. Message exchanges between Iran and the United States aimed at reaching
an initial MOU between Tehran and Washington have been suspended for at least
several days.
An
Iranian commander says the US is seeking full surrender.
A senior Iranian commander said on Tuesday that the
US is seeking the Islamic Republic’s “full surrender," but there would be
war if surrender were not an option: “When there is no surrender, war lies
ahead, and we have not yet revealed all our winning cards."
In
the early Monday US session, Wall Street and gold slipped, while oil surged
after an Iran/IRGC outlet said it had halted exchanges with the US over attacks on
Hezbollah. Iran's
negotiating team is stopping message exchanges with the United States through
mediators over Israel's attacks on Hezbollah in Lebanon. There will be no talks until Iran's demands on the cessation of
Israeli operations in Lebanon and Gaza are met, the report said, adding that
Tehran considers the attacks on the Lebanese group a violation of the April 8
ceasefire with the US. Iran and its
regional allied groups "have placed on their agenda the complete closure
of the Strait of Hormuz and the activation of other fronts, including the Bab
al-Mandab Strait," to punish Israel and its supporters, Tasnim's report
added.
Trump
says he has not heard from Iran on reports of suspended talks—NBC
On
Monday, Trump said he had not heard from Iran regarding reports that Tehran was
suspending talks with Washington: "I think we've been talking too much, if you want to know the
truth. I think going silent would be very good."
A
Khamenei adviser said Iran will not allow a US blockade to continue: "The Strait of Hormuz is under Iran's management—we
will not allow the maritime blockade to continue, and an escalation of tensions
in Lebanon will not be tolerated." The patience of the armed forces of the
Islamic Republic of Iran has its limits.”
On
Tuesday, June 2, Trump said reports claiming U.S.-Iran dialogue had stopped
several days ago are false
and that talks have been ongoing, including today. He said no one can predict
their outcome and urged Iran to reach an agreement: Fake news reports that the Islamic Republic of Iran and the U.S.A.
stopped speaking a few days ago are false and erroneous. The conversations
between us have been going on continuously, including four days ago, three days
ago, two days ago, one day ago, and today. Where they lead, one never knows,
but as I told Iran, “It’s time, one way or another, for you to make a deal."
You’ve been doing this for 47 years, and it cannot be allowed to go on any
longer!” President DONALD J. TRUMP
Conclusions
As usual, under Trump, both Wall Street and Real Street are under the control
of Trump’s morning moods, truths, and random spam/media bytes. Ahead of the
Nov. 26 midterm election, Trump has to ensure lower prices of oil (pre-Iran war
levels), but considering the present deadlock over the SOH and Iran’s suspected
HEUs, it may not be possible for a quick solution unless Trump blinks first.
Iran knows Trump always chickens out first due to domestic political compulsions and also Wall Street & Main Street. Thus, we may see another instance of
TACO (Trump Always Chickens Out) trade before any meaningful correction back to
reality, as SPX-500 is now trading over 30 TTM PE, a historical bubble zone.
Technical
outlook: DJ-30, NQ-100, and SPX-500
Looking
ahead, whatever may be the narrative, technically Dow Future (CMP: 51120) now has to sustain over 51500-51700
for a further rally to 52300-52700 in the coming days; otherwise, sustaining
below 51300/51000, it may fall to 50500/50200-50000/49500 and further to 48500/48000-47600/46600
and 46000/45700*-45200*/45000 and 43800/43000-42000/39000-36800 in the coming
days.
Similarly,
NQ-100 Future (30600) now
has to sustain over 30700 for a further rally to 31000/31200-31500*/32000 and
even 32400/32500 in the coming days; otherwise, sustaining below
30600/30300-30000/29500-29100/28500*-28100/27800, it may fall to 27400-27000
and 26600/26300-26000/25600; NQ-100 may again fall to 24600/24400-24000/23900
and further to 23600/23300-22800/22400 and 21900-21000 in the coming days.
Looking
at the chart, technically SPX-500 (CMP: 7600) now has to sustain over 7700 for a further rally to
8000-8300 in the coming days; otherwise, sustaining below 7675/7650-7550/7500-7300/7200
and 7100-6900, it may fall to 6835/6700 and further 6600-6500/6450 and
6350/6300-6250/6180 and 5860-4800 in the coming days.
