The S&P 500's energy stocks were some of the few bright spots in the blue-chip index Thursday, after continued US and Israeli bombing and renewed Iranian attacks on energy infrastructure throughout the Middle East diminished hopes that the Islamic Republic's military action to disrupt the flow of oil and gas out of the Gulf would quickly peter out. |
- The average price per gallon of gasoline in the US shot up $0.27 from last week to $3.25, a 9% increase, according to new data from AAA, as escalating tensions in the Middle East push oil prices higher.
- US crude oil climbed by more than 8.5% in afternoon trading, pushing the price of benchmark West Texas Intermediate crude above $81 at points, a level it hasn't seen since the summer of 2024.
- The price spike is hammering energy-sensitive stocks like airlines and consumer staples, and driving outperformance among oil and gas companies. Energy is already the S&P 500's top-performing sector by far in 2026.
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US gas drillers such as APA, Devon Energy, and Coterra Energy are seeing sizable gains as QatarEnergy's ongoing shutdown of liquefied natural gas production has sent global gas prices soaring. QatarEnergy fully shut down gas liquefaction on Wednesday. It is unclear when it will resume liquefaction, but once it does, it will take a month for Qatar's LNG production to hit peak capacity again. Coming into this week, there had been some very well-defined and well-subscribed trades: |
- Memory stocks > everything, especially software.
- Rest of the world's stocks > US stocks.
- Within the US market, the many > the few (as in, S&P 500 equal weight over S&P 500).
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War is far from kind. In fact, for markets, it is seemingly a catalyst for mean reversion: all of these aforementioned trades are reversing this week. As a result, the war has become a major rotation trade. |
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Since gasoline prices will mechanically work as a tax on consumption, it's unsurprising to see that Thursday's biggest losers early were consumer staples stocks, with that sector down about 2%. Walmart and Dollar General — whose less affluent customers can be especially sensitive to higher gasoline prices — were leading the charge lower there. |
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Selling H200s to China is proving more difficult than Nvidia may have anticipated. The Financial Times reports that the chip designer has asked TSMC to stop output of the H200 processors and instead produce Vera Rubin offerings, its upcoming flagship edition, citing two people familiar with the matter. Here's how we got here: |
- Nvidia has wanted to sell AI chips to China. Back in December, US President Donald Trump said this would be allowed for the H200, a generation that was much more powerful than what China produced domestically, but not cutting-edge tech. Leading Chinese tech companies wanted to buy a lot of these chips.
- Nvidia called on TSMC to increase production of these chips in expectation of realizing a sales opportunity as high as $54 billion for 2026.
- However, China would prefer its companies to purchase from domestic producers to reduce their dependence on US technology. Meanwhile, the US wants to limit the total number of these newly permitted AI chips that can get into China, as well as how many each buyer can purchase.
- Nvidia, which had planned to have its first shipments of H200s there by Lunar New Year, still hasn't sold any of these chips to China.
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There's likely a lot more conviction that megacap tech companies outside of China will appreciate any supply boost for these next-generation processors than the US-China trade and regulatory morass that's complicated H200 sales will suddenly be swept away. |
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That said, the Trump administration will reportedly propose regulations that would require US government approval for AI chip shipments worldwide, expanding existing export controls that currently apply to roughly 40 countries. Nvidia and AMD both dropped on the news. The twists and turns here, and conflicting media coverage, has been maddening to try and keep track of. It's tough to imagine the level of frustration for an executive attempting to navigate their operations through this haze. Maybe the real H200 sales were the friends we never made along the way. |
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| - 🎬 Oscars: Oscar voting ended last night, putting a cap on one of the wildest races in recent memory. The most contested categories to keep an eye on are Best Picture (where "One Battle After Another" is priced in* at a 77% chance of winning, followed by "Sinners" with a 20% chance) and Best Actor (where Timothée Chalamet is priced at a 56% chance of victory to Michael B. Jordan's 37%).
- ⛽ Gas: With the price of gas ramping upward, prediction markets have been rapidly shifting as well. As recently as Tuesday, the probability that gas would finish the month at $3.50 or higher was trading at a 49% chance. Within two days, that's now up to 67%.
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*Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC. |
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- Despite the recent rally, bitcoin faces a triple threat of resistance
- Paramount CEO David Ellison pushed back on rumors fueled by Netflix's Ted Sarandos that the Warner Bros. Discovery merger would result in $16 billion in cuts
- The Trade Desk is reportedly in talks with OpenAI to help it sell ads
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