U.S. stocks started the week on a weak note as escalating tensions between the U.S. and Iran, combined with a sharp sell-off in semiconductor stocks, weighed heavily on investor sentiment. Stock futures also pointed to further losses ahead of Tuesday's session.
The Dow Jones Industrial Average fell over 140 points, while the S&P 500 declined 0.8%. The technology-heavy Nasdaq Composite dropped around 400 points, with the Nasdaq 100 losing nearly 2% as chipmakers led the market lower.
Semiconductor stocks faced intense selling pressure, with Nvidia, AMD, Intel, Micron, Western Digital, and Sandisk falling between 3.5% and 13%. The weakness followed a steep decline in South Korea's chip sector, where SK Hynix plunged more than 15%, its biggest one-day drop on record. Samsung Electronics also tumbled nearly 10%, contributing to another trading halt in South Korea's KOSPI index. Meanwhile, U.S.-listed shares of SK Hynix dropped over 9% after a strong debut last week.
Geopolitical concerns further rattled markets as tensions between the U.S. and Iran intensified, fueling fears of supply disruptions in the energy market. President Donald Trump proposed a 20% fee on cargo vessels receiving U.S. navigation assistance through the Strait of Hormuz, raising concerns about higher shipping costs and renewed inflationary pressure.
Oil prices reacted sharply to the developments. Brent crude surged nearly 10% to around $83 per barrel, while WTI crude rebounded toward the $80 mark. Rising inflation expectations also pushed U.S. Treasury yields higher, with the 10-year Treasury yield climbing above 4.6% and the 30-year yield reaching 5.1%.
Looking ahead, investors are focused on several key events that could shape market direction. The June U.S. inflation report, the final inflation reading before the Federal Reserve's policy meeting later this month, will be closely watched. Markets will also monitor testimony from Fed Chair Kevin Warsh before Congress, along with speeches from four other Federal Reserve officials.
Corporate earnings season also gathers pace, with major U.S. banks—including JPMorgan Chase, Bank of America, Goldman Sachs, Wells Fargo, and Citigroup—scheduled to release quarterly results, providing further insight into the health of the U.S. economy and financial sector.
Frequently Asked Questions
Why did U.S. markets fall today?
U.S. stocks declined due to escalating geopolitical tensions between the U.S. and Iran, a sharp sell-off in semiconductor stocks, and rising oil prices and Treasury yields, which increased concerns about inflation.
Why are higher oil prices important for investors?
Higher oil prices can increase transportation and production costs, fueling inflation. Persistent inflation may encourage central banks to keep interest rates higher for longer, which can pressure stocks.
Why do rising bond yields affect the stock market?
When Treasury yields rise, borrowing becomes more expensive for businesses and consumers. Higher yields also make bonds more attractive relative to stocks, often leading investors to reduce exposure to equities.
What should traders watch next?
Key events include the U.S. CPI (inflation) report, comments from Federal Reserve officials, and earnings from major banks like JPMorgan, Bank of America, Goldman Sachs, Wells Fargo, and Citigroup, all of which could influence market direction.
