Dow falls 138 points as Iran tensions hit chip stocks, lift oil prices

• President Trump announced plans to blockade the Strait of Hormuz and seek 20% reimbursement on cargo, sending oil above $78/barrel and reviving inflation fears that pushed markets to price in at least one 25-basis-point rate hike by year-end
• Semiconductor stocks led declines with SK Hynix falling 6% on debut, Intel down 7%, AMD down 4%, and Sandisk plunging 13% as investors reassessed valuations after the AI-driven rally
• Major bank earnings from JPMorgan, Goldman Sachs, Morgan Stanley and others kick off this week alongside June CPI, PPI, retail sales data and Fed Chair Warsh testimony before Congress

Market Summary: Iran Tensions Drive Oil Surge, Tech Selloff

Key Market Movements

US equities closed lower Monday, with the Dow Jones falling 138 points (-0.26%) to 52,498.64, the S&P 500 declining 0.79% to 7,515.34, and the Nasdaq dropping 1.55% to 25,873.18.

Geopolitical Catalyst

President Trump announced plans to blockade the Strait of Hormuz and seek 20% reimbursement on cargo transiting the strategic waterway following military exchanges with Iran. This sparked sharp energy price increases: WTI crude jumped 9.4% to over $78/barrel, while Brent crude surged 9.6% to above $83/barrel.

Sector Impact

Semiconductors led losses:

• SK Hynix US-listed shares declined
• Intel fell 7%
• Micron Technology dropped 5%
• AMD slid 4%
• Sandisk plunged 13%
• Seagate Technology lost 6%

The Philadelphia Semiconductor Index significantly underperformed as investors reassessed valuations following the sector's AI-driven rally.

Market Implications

Rising energy costs renewed inflation concerns, with markets now pricing at least one 25-basis-point rate increase before year-end. This complicates the Federal Reserve's policy outlook ahead of Fed Chair Kevin Warsh's congressional testimony this week.

Key Catalysts Ahead

• Economic data: June CPI, PPI, and retail sales reports
• Earnings season: Major banks (JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, Wells Fargo) plus Netflix, Johnson & Johnson, and UnitedHealth reporting
• Expectations: Analysts project 23.7% year-over-year S&P 500 earnings growth for Q2

The combination of geopolitical uncertainty, inflation risks, and elevated earnings expectations is expected to maintain market volatility.