Morning Bid: Chip dip

• Samsung Electronics reported a 19-fold increase in Q2 operating profit, yet its stock and rival SK Hynix both slid, indicating investors believe upside from chip demand is already reflected in valuations
• Microsoft announced 4,800 job cuts in its gaming division following a roughly 20% drop in the company's stock price
• Oil prices rose to nearly $73 per barrel for Brent crude after Iran reportedly fired missiles at commercial ships in the Strait of Hormuz

Market Summary: Chip Sector Volatility and Global Developments

Chip Sector Pullback

U.S. chip stocks experienced a reversal on Tuesday after Monday's rally, with Nasdaq futures down over 1% before the bell. The decline followed a sharp selloff in Asian semiconductor stocks, where South Korea's chip-heavy KOSPI index dropped approximately 5%. Despite Samsung Electronics reporting a 19-fold surge in Q2 operating profit, both Samsung and rival SK Hynix saw their shares slide, suggesting investors believe much of the chip demand upside is already priced in.

Monday's gains were driven by news that Broadcom extended its chip supply deal with Apple through 2031, pushing the S&P 500 and Nasdaq higher.

Corporate Developments

Microsoft announced approximately 4,800 job cuts as part of a gaming division restructuring, following a roughly 20% decline in the company's stock price. SpaceX is set to join the Nasdaq 100 index.

Currency and Commodities

The Japanese yen remained near 40-year lows around 162 per dollar, with traders monitoring for potential intervention by Japanese authorities. Oil prices rose following reports that Iran fired missiles at commercial ships in the Strait of Hormuz, with Brent crude trading near $73 per barrel.

Geopolitical Focus

The NATO summit commenced in Ankara, Turkey, with European defense spending as a priority item. NATO members are demonstrating compliance with increased spending targets, particularly the 5% of GDP goal by 2035 pushed by President Trump. A meeting between Trump and Ukrainian President Zelenskiy is scheduled for Wednesday, with Trump suggesting an end to the Ukraine war may be near.

Data Releases

U.S. May trade balance and 3-year note auction scheduled for Tuesday.