The stock market fell on July 7 as a chip rally fizzled and oil surged on renewed U.S.-Iran tensions, marking a sharp reversal after weeks of technology-driven gains.
All three major U.S. indices ended the day in negative territory. The Nasdaq Composite fell 1.16% to 25,818.69, the S&P 500 dropped 0.45% to 7,503.85, and the Dow Jones Industrial Average lost 0.25% to 52,925.15, according to a Reuters report published by GV Wire.
The selloff centered on semiconductor stocks, which had powered much of the year’s rally but now faced mounting skepticism about whether companies could sustain high levels of artificial intelligence spending. The Philadelphia Semiconductor Index (SOX) declined 4.2% in the week to July 3, according to Reuters. Hedge funds dumped tech hardware stocks for a fourth consecutive week, with semiconductor and hardware companies the most net sold U.S. stock sector, according to a Goldman Sachs client note cited by Reuters.
Samsung Electronics, the world’s largest memory-chipmaker, reported blockbuster results: a 19-fold jump in April-June operating profit to 89.4 trillion won ($58.4 billion), the third straight quarter of record operating profit. Rather than reassuring investors, the results triggered selling in Samsung and rival SK Hynix shares, according to GV Wire. Investors increasingly questioned whether profit growth linked to artificial intelligence could be sustained if supply bottlenecks in key components such as memory chips eased.
A Reuters report that Chinese startup DeepSeek was developing its own AI chip further weighed on markets, as it could reduce the company’s reliance on major chipmakers to train and run its AI models.
Oil prices moved sharply higher as tensions between the United States and Iran escalated. U.S. crude rose 5.3% to $72.20 a barrel, and Brent crude climbed to $76.09 per barrel, up 5.9%, according to GV Wire. The moves came after Qatar blamed Iran for attacks on several commercial vessels in the Strait of Hormuz, with one LNG tanker forced to evacuate its crew due to explosion risk, Reuters reported.
The White House revoked a license it had granted Iran to sell oil as part of broader efforts to ease tensions from the three-month war that has upended global energy supplies. The U.S. Department of the Treasury rescinded its 60-day waiver on sanctions on Iranian oil, with new transactions prohibited after 12:01 a.m. EDT on July 17, according to Al Jazeera. The two nations are continuing negotiations toward a final agreement to end the conflict.
Josh Young, chief investment officer at Bison Interests, warned that the reimposition of sanctions represented a major escalation. “Iran may respond with force, further limiting exports through the Strait of Hormuz, and risking $100+ oil prices again in the near term,” Young said, according to GV Wire.
Tony Sycamore, market analyst at IG Australia, noted that disagreement between the U.S. and Iran over whether the Strait of Hormuz is an international waterway or partly Iran’s territorial waters was never fully resolved under the June 17 memorandum of understanding. “It remains to be seen whether this morning’s U.S. strikes bring a swift end to the latest escalation or Iran elects to continue flexing its leverage over the Strait with actions that fall short of triggering a broader conflict,” Sycamore said in a note to clients, according to Al Jazeera.
Sources
- GV Wire/Reuters — U.S. stock indices declines on July 7, chip sector weakness, oil price surge, Iran sanctions revocation, analyst commentary from Josh Young
- Reuters — Hedge fund selling of chip stocks for fourth consecutive week, SOX index decline of 4.2%, Goldman Sachs data on sector flows, Samsung earnings and market reaction, DeepSeek AI chip report
- Al Jazeera — Oil price surge details, Brent crude levels, Strait of Hormuz vessel attacks, U.S. Treasury waiver rescission details, analyst commentary from Tony Sycamore
