Wall Street closed lower as climbing crude oil prices driven by Middle East tensions and a massive share sale by Intel weighed on investor sentiment, according to Reuters. The S&P 500 declined 0.06% to finish at 7,753.12 points, while the tech-heavy Nasdaq Composite dropped 0.32% to 26,605.36 points, and the Dow Jones Industrial Average slipped 0.11% to 53,976.04 points.
Strait of Hormuz Disruptions Push Crude Oil Higher
U.S. crude oil jumped about 5% to settle at $82.13 a barrel, according to Reuters, as investors lost confidence in a potential deal to reopen the Strait of Hormuz. The supply concerns followed reported attacks on three tankers in and around the strait over a 24-hour window, as noted by Investing.com. President Donald Trump demanded that Iran pay compensation for people he said were killed in wars, attacks, and protests. Tehran previously called on Washington to meet conditions, including recompensing Iran for damages caused since U.S. and Israel strikes on its territory more than five months ago.
“The direct impact is just the energy sector and… oil prices, and they’re just sticky here above where they were on February 27 before the conflict,” said Tom Hainlin, investment strategist at U.S. Bank Wealth Management in Minneapolis, as reported by Reuters. “So there’s clearly no transparency of the path to get back to where we were before the conflict started, and so that premium’s just being built in.”
Intel Stock Drops After $15 Billion Share Sale
Shares of Intel fell 4.1% after the chipmaker announced plans to raise $15 billion through a share sale, according to Reuters reporting. The downward pressure on chipmakers dragged down Nvidia by 2.9%. A source familiar with the matter told Reuters that a group of financial firms, including Apollo Global and Blackstone, is working with Nvidia to assemble a $500 billion funding package dedicated to artificial intelligence infrastructure development.
Meanwhile, global tech sentiment faced additional headwinds from abroad. In South Korea, Samsung Electronics reported preliminary fiscal first-quarter results and second-quarter guidance showing a consolidated operating profit of roughly 89.4 trillion won ($59.01 billion), a 19-fold year-over-year increase driven by artificial intelligence memory demand, according to Investing.com. Despite the financial figures, Samsung shares closed nearly 7% lower as investors engaged in profit-taking, dragging SK Hynix down over 6% and pulling the South Korean benchmark index down nearly 5%, per Investing.com.
Pro Tip: When geopolitical energy shocks intersect with heavy corporate capital raises, monitor sector-specific rotations rather than broad market averages. Truist chief investment officer and chief market strategist Keith Lerner noted to Investing.com that money rotating into alternative sectors rather than leaving the market entirely remains a healthier development for broader equities.
Fed Policy Expectations and Upcoming Earnings
Traders adjusted their monetary policy outlook following employment data released last Friday showing that U.S. employers unexpectedly shed 23,000 jobs in July. According to the CME FedWatch tool cited by Reuters, market participants priced in a 52% probability of a Federal Reserve interest rate hike in September. Additional corporate reports scheduled for the week include earnings from Applied Materials and Cisco.
Despite recent macro pressures, corporate reporting has largely beaten expectations. LSEG data reported by Reuters indicates that roughly 85% of the 436 companies in the S&P 500 that have reported earnings for the period surpassed analyst estimates.
Frequently Asked Questions
Why did U.S. stock indices close lower?
The S&P 500, Nasdaq, and Dow closed lower due to escalating tensions around the Strait of Hormuz driving oil prices up by about 5%, alongside a 4.1% drop in Intel shares following a $15 billion share sale, according to Reuters.
How are oil markets reacting to Middle East tensions?
U.S. crude oil settled at $82.13 a barrel after jumping roughly 5%, driven by fading investor optimism over a resolution to the regional crisis and tanker attacks near the Strait of Hormuz, as reported by Reuters and Investing.com.
What are traders expecting from the Federal Reserve?
Following a U.S. employment report showing a loss of 23,000 jobs in July, traders priced in a 52% chance of a Federal Reserve interest rate hike in September using the CME FedWatch tool, according to Reuters.
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