Wall Street ends lower to start the week, with tech shares leading declines after President Donald Trump said he would reinstate a blockade on Iranian ports, a move that sent oil prices sharply higher and curbed risk appetite.
Investors are bracing for a packed stretch of corporate earnings, key inflation data and high-profile testimony from Federal Reserve Chair Kevin Warsh. Among the three major indexes, the Nasdaq posted the steepest losses, followed by the S&P 500, while the Dow’s retreat was softened by gains in energy names tied to the oil surge.
“Stocks really reached a high at the very end of May, driven mainly by semiconductors,” said Thomas Martin, senior portfolio manager at GLOBALT in Atlanta. He added that after such a fast move higher, questions about sustainability are natural, noting that valuations offer less cushion amid persistent unknowns.
Wall Street ends lower as oil jumps on Iran risks
Semiconductor shares again set the tone as the months-long AI trade continued to amplify swings. The Philadelphia SE Semiconductor index underperformed, with SanDisk, Marvell Technology and Western Digital logging notable declines. U.S.-listed shares of South Korea’s SK Hynix also fell after surging more than 12% in their Nasdaq debut on Friday.
Over the weekend, the United States and Iran exchanged heavy airstrikes, escalating the conflict and prompting Trump to revive the U.S. blockade on Iranian ports. Crude futures jumped, settling up 9.4%, raising concerns that tighter supply and higher energy costs could feed broader, more persistent inflation.
Warsh is scheduled to deliver his first semiannual testimony before Congress on Tuesday and Wednesday, where lawmakers are expected to press him on the inflationary impact of the U.S.-Iran conflict and the Federal Reserve’s likely policy path. Markets are currently pricing in at least one 25-basis-point interest rate increase by year-end, according to LSEG data.
This week’s economic calendar includes consumer and producer price index reports from the Labor Department, offering a read on how June inflation may have been influenced by conflict-related disruptions. The Commerce Department’s June retail sales report will provide another gauge of consumer resilience as households contend with higher gasoline prices and other cost pressures. Consumer spending accounts for roughly 70% of U.S. economic activity.
At the close, the S&P 500 fell 60.05 points, or 0.79%, to 7,515.34, the Nasdaq Composite dropped 408.43 points, or 1.55%, to 25,873.18, and the Dow Jones Industrial Average slipped 138.37 points, or 0.26%, to 52,498.64.
Major banks including Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Wells Fargo are slated to report quarterly results on Tuesday, effectively kicking off second-quarter earnings season. “I wonder if the market is going to really start to revolt a little bit at the deluge of corporate issuance to fund this AI capex that has been called into question for a couple of years now,” said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. He added that it will be worth watching how large lenders discuss corporate bonds, fixed income, and related exposures.
Analysts expect S&P 500 companies to post aggregate second-quarter earnings growth of 23.7% from a year earlier, up from the 19.2% estimate on April 1, according to LSEG.
For Hawaiʻi investors, elevated oil prices can translate to higher costs across transportation and electricity, which can ripple through household budgets and tourism-related businesses. Market volatility may remain elevated as the week’s data and Fed commentary unfold.
