Key Points
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The Dow fell about 200 points while the Nasdaq Composite held roughly flat and the S&P 500 slipped 0.17%.
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Shipping through the Strait of Hormuz has nearly stopped again, with three vessels crossing Sunday against roughly 130 daily before the war.
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Earnings from major retailers this week will show whether July’s drop in consumer spending was a blip or a trend.
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A ceasefire expired in the Middle East this morning. Memory chip stocks had another excellent day. The top stock market indexes split the difference.
The Nasdaq Composite (NASDAQINDEX: ^IXIC) is up 0.03% as of 12:26 p.m. ET, the S&P 500 (SNPINDEX: ^GSPC) is down 0.17%, and the Dow Jones Industrial Average (DJINDICES: ^DJI) has fallen 0.31%, or roughly 200 points. The Dow went red minutes after the open and stayed down. The Nasdaq spent most of the morning in positive territory before drifting toward breakeven.
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Why chip stocks are rallying through a geopolitical mess
The June 17 memorandum of understanding between Washington and Tehran hit its 60-day deadline Monday with nothing signed. A senior Iranian official told Reuters that Tehran is going “fully offensive” and would use its military to break the U.S. naval blockade if talks fail.
President Trump, for his part, told Fox News he is in no rush and threatened to bomb Oman if it gets in the way of negotiations. Oman, for the record, has been trying to mediate the Iranian conflict.
Shipping through the Strait of Hormuz has essentially stopped. Three vessels crossed on Sunday against roughly 130 daily before the war began in February. Brent crude rose 0.7% to $89.13, which is a quiet day by recent standards.
Meanwhile, memory chips continue their remarkable run. SK Hynix (NASDAQ: SKHY) rose 6.5% and added roughly $83 billion in market value. Micron Technology (NASDAQ: MU) climbed 5.9% and rose above $1,000 per share again.
On a related note, Nvidia (NASDAQ: NVDA) rose 0.9% on news it will finance up to $105 billion in credit and compute for an OpenAI data center in Pike City, Ohio. The first 4.25 gigawatts of this 20-year project will arrive in 2028, reminding investors that OpenAI and partners are planning way ahead.
Image source: Getty Images.
But there was plenty of bearish Wall Street action, too.
Meta Platforms (NASDAQ: META) dropped 3.3% ahead of Tuesday’s opening arguments in a federal trial in Oakland. 29 state attorneys general allege that the company designed Facebook and Instagram to get children addicted. In terms of index impact, Microsoft (NASDAQ: MSFT) was the S&P 500’s biggest drag with a 2.4% drop, following a high-profile analyst note. Morgan Stanley noted that hyperscalers are spending a lot of upfront cash on AI data center builds. The payoff may take years to materialize, creating financial challenges in the meantime.
Hyperscaler investors heard the warning while the memory stocks took the same report as a bullish sign. Microsoft weighed on all three indexes more than any other stock this morning.
The market keeps climbing a wall of worry
The Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP) fell 0.58%, more than three times the cap-weighted drop, and decliners beat advancers by about 1.5-to-1 on the NYSE. Most stocks had a bad Monday; a handful of chipmakers covered those widespread losses.
Perspective helps, though. The S&P 500 is within a whisper of last Thursday’s record and up 13.6% on the year, with second-quarter earnings tracking near 50% growth. Rate hike odds for September have fallen to about 31% from roughly 50/50 just a week ago.
This week’s retail earnings will matter more than they usually would. July retail sales fell for the first time in nine months and consumer sentiment dropped to 51.0. Some of the country’s largest retailers are about to show whether that was a blip or a trend.
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Anders Bylund has positions in Invesco S&P 500 Equal Weight ETF, Micron Technology, and Nvidia. The Motley Fool has positions in and recommends Meta Platforms, Micron Technology, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
