Wall Street Under Increasing Pressure, Chip Stocks Plunge
The US stock market weakened again on Monday (July 13th), as significant pressure fell on chip stocks and macroeconomic sentiment worsened. Investors grew cautious after the conflict in the Strait of Hormuz escalated and sparked renewed concerns about energy inflation.
The S&P 500 index fell 0.6%, the Nasdaq 100 fell further by 2%, while the Dow Jones Industrial Average plunged more than 150 points. The greatest pressure came from the technology sector, particularly semiconductor stocks, which have been driving the market rally thanks to optimism about artificial intelligence (AI).
Chip stocks weakened amid concerns that large AI service providers, or hyperscalers, could begin to reduce spending on AI infrastructure. SK Hynix ADRs fell 8% after surging 13% on their debut on Friday. Pressure increased after a Korean brokerage assessed the company as at risk of missing its next earnings target.
Shares of Nvidia, AMD, and Intel each fell more than 3%. Meanwhile, memory manufacturers like Sandisk and Micron experienced greater pressure, with Sandisk falling 5% and Micron plunging 12%. This decline made the Nasdaq the index with the most pressure during the session.
Market sentiment also worsened after President Donald Trump announced that the United States would reimpose a blockade on Iranian vessels in the Strait of Hormuz. This move increases the risk of conflict escalation and potentially exacerbates energy supply disruptions, which could ultimately increase inflationary pressures.
Pressure was also evident in the banking sector ahead of this week's earnings season. JPMorgan and Bank of America each fell 0.5%, while Citi fell 1.5%. Investors are now waiting to see whether the earnings reports from major banks can signal the resilience of the US economy amid the risks of high interest rates and escalating geopolitical tensions.
As a result, Wall Street is likely to remain defensive as long as chip stocks remain stable and the Hormuz conflict persists. If energy prices continue to rise, inflation expectations could strengthen again and the Fed remains hawkish. This situation risks depressing technology stocks and risky assets, and encouraging a temporary shift to the energy sector.
Source: Newsmaker.id
