Closing Bell: Chip Selloff and Oil Spike Pressure Stocks

U.S. stocks finished lower Monday as semiconductor shares slid, crude oil prices surged on renewed Middle East tension, and investors prepared for a pivotal week focused on inflation, Fed commentary and bank earnings. 

U.S. crude oil futures (/CL) jumped 9.31% to $78.06 per barrel Monday, and the CBOE Volatility Index (VIX) climbed 14.17% to 17.16, reflecting increased investor caution. President Donald Trump on Monday said the U.S. will impose fees in the Strait of Hormuz and an Iranian port blockade. 

The S&P 500 (SPX) fell 0.79% to 7,515.34. The tech-heavy Nasdaq-100 (/NDX) dropped 1.88% to 29,264.10, and the Dow Jones Industrial Average ($DJI) declined 0.26% to 52,498.64. The Russell 2000 (RUT) lost 0.83% to 2,953.17. Semiconductors were among the weakest areas of the market, with the PHLX Semiconductor Sector Index (SOX) tumbling 4.78% to 12,347.78. 

It wasn’t all gloom and doom Monday: shares of MGM Resorts International (MGM) rose 0.77%, paring bigger gains, on a report that media entrepreneur Barry Diller is in talks to acquire the remaining stake he does not control. The deal would value MGM at more than $12 billion. The focus Tuesday is on Consumer Price Index data, Federal Reserve Chair Kevin Warsh's congressional testimony, and earnings from five of the nation's largest banks: JPMorgan Chase (JPM), Bank of America (BAC), Goldman Sachs (GS), Wells Fargo (WFC), and Citigroup (C). 

Three Things to Watch from Monday’s Market 

Oil and Inflation Return to the Forefront: Crude oil moved sharply higher, up more than 9%, after another weekend of tense military sparring between the U.S. and Iran, which impacts the critical Strait of Hormuz energy shipping route. This comes markets prep to parse inflation data, and Chair Warsh clues on the path of interest rates. Businesses exposed to refining, where margins can rise when oil prices fluctuate, were higher: Valero Energy (VLO), was among the S&P 500’s biggest winners, up nearly 5.5%, and integrated oil exploration and refining giants ExxonMobil (XOM), Chevron (CVX) and ConocoPhillips (COP) also were higher. See 'Feedback Loop' Amid Heightened Inflation Concerns, Bitcoin Debate Intensifies and Why Oil's Muted Response to Geopolitical Tensions Has Investors on Edge

TSMC Earnings Loom After Revenue Surge: Taiwan Semiconductor (TSM) reported June revenue growth of nearly 68% year-over-year ahead of its earnings release later this week. Several Schwab Network guests pointed to persistent AI infrastructure demand as investors evaluate semiconductor valuations after Monday's sharp sector selloff. See TSM Revenues Jump 68% Y/Y: What it Means Ahead of Earnings This Week

AI Memory Trade Faces Volatility Test: Schwab Network guests Monday debated if the semiconductor rally remains in its early stages of revenue, earnings and margin expansion, given AI infrastructure spending. Volatility across memory-related stocks continued. Shares of SK Hynix (SKHY) fell 9% Monday, just days after its blockbuster U.S. public debut. Nvidia (NVDA) and Micron Technology (MU) shares fell 3.5% Monday. U.S. John Belton, a Gabelli Funds portfolio manager, discussed why he thinks Nvidia stock is cheap at the current price. Also see AI Memory Volatility, Chip Cyclicality & What's Next for Tech Trade

Economic Events for Tuesday, July 14 (ET) 

• 06:00 AM: NFIB Business Optimism Index 
• 08:15 AM: ADP Employment Change. 
• 08:30 AM: Consumer Price Index (CPI). 
• 09:00 AM: Fed Chair Warsh Testimony to Congress. 

Earnings Calendar 

Tuesday, July 14 

Premarket: JPM, BAC, GS, WFC, C, Fastenal (FAST), Ericsson (ERIC). 

Postmarket: Aehr Test Systems (AEHR). 

Wednesday, July 15 

Premarket: ASML Holding (ASML), Johnson & Johnson (JNJ), Morgan Stanley (MS), BlackRock (BLK), BNY (BNY), PNC Financial Services Group (PNC), Elevance Health (ELV), Cintas (CTAS). 

Postmarket: United Airlines (UAL), J.B. Hunt (JBHT). 

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