Stocks Settle Lower as Chipmakers Routed and US-Iran Tensions Escalate

The S&P 500 Index ($SPX) (SPY) on Monday closed down -0.79%, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -0.26%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.88%.  September E-mini S&P futures (ESU26) fell -0.79%, and September E-mini Nasdaq futures (NQU26) fell -1.88%. 

Stock indexes retreated on Monday and settled lower as a sell-off in South Korean chipmakers weighed on technology stocks and crude oil prices surged amid renewed US-Iran hostilities.  South Korea’s Kospi Index closed down more than -8% on Monday after SK Hynix and Samsung Electronics plunged more than -10% on concerns that the artificial intelligence boom has become overextended.  On the positive side, software stocks rallied.  Also, energy producers moved higher with crude oil prices up sharply.

An escalation in hostilities in the Middle East weighed on market sentiment and led to risk-off in asset markets, after WTI crude oil (CLQ26) soared more than +9% on Monday to a 3.5-week high.  Crude prices rallied after the US, over the weekend, launched fresh missile attacks against Iran, targeting Iranian air-defense systems, coastal radar sites, and missile and drone capabilities.  Meanwhile, Iran launched retaliatory missile and drone attacks at targets in Jordan, Bahrain, Kuwait, and Qatar.  Iran also attacked two vessels attempting to transit the Strait of Hormuz on Sunday.  The higher crude oil prices also boosted bond yields, a bearish factor for stocks, as the 10-year T-note yield rose to a 7-week high of 4.61% on Monday. 

Stocks extended their losses and crude oil prices added to their gains on Monday after President Trump said the US is reinstating the Iranian blockade and stopping Iranian ships from using the Strait of Hormuz.  He added that, otherwise, the strait will remain open "with or without Iran" and that the US would be the waterway’s “guardian,” demanding to be reimbursed at a rate of 20% of all cargo shipped for providing protection in the area.  The reinstatement of the blockade on Iranian ports may prompt Iran to step up attacks on ships seeking to transit the Strait of Hormuz. 

Hawkish comments on Monday from Fed Governor Christopher Waller weighed on stocks and bonds when he said, "If we get another hot reading on core inflation this week, then the FOMC will need to consider tightening monetary policy in the near term."

The outlook for strong Q2 earnings, which will begin this week, is a bullish factor for stocks.  Forecasts compiled by Bloomberg Intelligence suggest Q2 earnings may increase by +23%, close to Q1’s blowout earnings of +30%, which was more than double the +12% analysts had expected.  AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2. 

The markets are discounting a 41% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.

Overseas stock markets settled mixed on Monday.  The Euro Stoxx 50 closed up +0.02%.  China's Shanghai Composite tumbled to a 3-month low and closed down -2.06%.  Japan's Nikkei-225 Stock Average fell to a 1-month low and closed down -1.92%.

Interest Rates

September 10-year T-notes (ZNU6) on Monday closed down -10.5 ticks, and the 10-year T-note yield rose +4.9 bp to 4.610%.  T-notes fell to a 7-week low on Monday, and the 10-year T-note yield climbed to a 7-week high of 4.610%.  T-notes were under pressure from Monday’s +9 surge in WTI crude oil prices to a 3.5-week high, which raised inflation expectations.  T-notes sank to their lows on comments from Fed Governor Christopher Waller, who said the FOMC may have to raise interest rates if core inflation remains elevated.

European government bond yields moved higher on Monday.  The 10-year German bund yield rose +4.3 bp to 3.109%.  The 10-year UK gilt yield rose +9.8 bp to 4.970%.

Swaps are discounting a 20% chance of a +25 bp ECB rate hike at its next policy meeting on July 23.

US Stock Movers

Chipmakers and AI-infrastructure stocks are falling today and are weighing on the broader market.  The iShares Semiconductor ETF (SOXX) closed down more than -4%.  Sandisk (SNDK) closed down more than -11%, and Arm Holdings (ARM) and Marvel Technology (MRVL) closed down more than -7%.  Also, Lam Research (LRCX), Intel (INTC), and Seagate Technology Holdings Plc (STX) closed down more than -5%, and Micron Technology (MU), Western Digital (WDC), and Microchip Technology (MCHP) closed down more than -4%.  In addition, Nvidia (NVDA) closed down more than -3% to lead losers in the Nasdaq 100, and Advanced Micro Devices (AMD), ASML Holding NV (ASML), Applied Materials (AMAT), NXP Semiconductors (NXPI), KLA Corp (KLAC), Broadcom (AVGO), and Texas Instruments (TXN) closed down more than -3%. 

Airline stocks fell as Monday’s +9% surge in crude oil prices raised fuel costs and diminished profitability prospects for the companies.  Alaska Air Group (ALK) closed down more than -5%, and American Airlines Group (AAL) and United Airlines Holdings (UAL) closed down more than -3%.  Also, Delta Air Lines (DAL) and Southwest Airlines (LUV) closed down more than -1%.

Cryptocurrency-exposed stocks were under pressure on Monday as Bitcoin (^BTCUSD) fell more than -2%.  Galaxy Digital Holdings (GLXY) closed down more than -5%, and Circle Internet Group (CRCL) closed down more than -4%.  Also, MARA Holdings (MARA) and Riot Platforms (RIOT) closed down more than -3%, and Strategy (MSTR) closed down more than -2%.  In addition, Coinbase Global (COIN) closed down more than -1%.

Software stocks moved higher on Monday, a supportive factor for the broader market.  Atlassian Corp (TEAM) closed up more than +8%, and Intuit (INTU) closed up more than +5% to lead gainers in the Nasdaq 100.  Also, Thomson Reuters (TRI) closed up more than +5%, and Salesforce (CRM) closed up more than +4% to lead gainers in the Dow Jones Industrials.  In addition, Workday (WDAY), Adobe Systems (ADBE), and ServiceNow (NOW) closed up more than +3%, and Palantir Technologies (PLTR) closed up more than +2%.  Finally, Autodesk (ADSK), Datadog (DDOG), and Microsoft (MSFT) closed up more than 1%. 

Energy producers and service providers rose on Monday after WTI crude oil surged more than +9%.  Phillips 66 (PSX) and Valero Energy (VLO) closed up more than +5%, and Diamondback Energy (FANG), ExxonMobil Holdings (XOM), and Marathon Petroleum (MPC) closed up more than +4%.  Also, APA Corp (APA), ConocoPhillips (COP), Devon Energy (DVN), Occidental Petroleum (OXY), and Chevron (CVX) closed up more than +3%, and Haliburton (HAL) closed up more than +2%.

AppLovin (APP) closed down more than -13% to lead losers in the S&P 500 and Nasdaq 100 after Bank of America cited data that the company’s eCommerce footprint is expanding at a slower-than-expected pace following its recent general availability launch.

SK Hynix ADRs (SKHY) closed down more than -9% after the stock plunged more than -15% in South Korean trading, fueling concerns that the AI-trade has become overstretched. 

First Hawaiian (FHB) closed down more than -3% after agreeing to acquire TriCo Bancshares for $63.12/share in an all-stock transaction. 

TriCo Bancshares (TCBK) closed up more than +12% after First Hawaiian agreed to acquire the company for $63.12/share in an all-stock transaction. 

Biogen (BIIB) closed up more than +4% after Truist Securities upgraded the stock to buy from hold with a price target of $235. 

Humana (HUM) closed up more than +3% after Wells Fargo Securities upgraded the stock to overweight from equal weight with a price target of $502.

American Express (AXP) closed up more than +1% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $400.

Earnings Reports(7/14/2026)

Bank of America Corp (BAC), Citigroup Inc (C), Fastenal Co (FAST), Goldman Sachs Group Inc/The (GS), JPMorgan Chase & Co (JPM), Liberty Live Holdings Inc (LLYVA), Wells Fargo & Co (WFC).