Closing Bell: Investors Rotate into Value-Priced Tech as Oil Prices Rise

Stocks closed mixed Wednesday: broader benchmarks gained ground, but the tech-heavy Nasdaq-100 slipped, and semiconductors were a drag on the S&P as traders soured on growth investments.

The S&P 500 (SPX) rose 0.38% to 7,572.40, the tech-heavy Nasdaq-100 (/NDX) fell 0.28% to 29,502.60, and the Dow Jones Industrial Average ($DJI) inched up 0.29% to 52,658.64. Small caps also gained, with the Russell 2000 (RUT) up 0.39% to 2,976.26.

With another wave of U.S. military strikes in Iran, the price of crude oil climbed another 1% to above $80 per barrel.

Three trends to watch from Wednesday’s market:

Could oil go to $100 a barrel again? With 10 million barrels of oil potentially transiting through the Strait of Hormuz, and three to four million barrels of oil offline, the disruption is real because crude inventories are low around the world, says Ben Cook, portfolio manager, Hennessy Energy Transition Fund. In a conversation with Sam Vadas to close out Wednesday’s trading, Cook said China’s ability to control consumption, reducing demand for oil, has been a benefit to global markets. But its buying pressure ultimately will be price supportive, he said. Cook thinks oil prices could move back toward $100 per barrel if the U.S.-Iran conflict continues for several months leading into U.S. midterm elections. He sees U.S. energy companies Williams Companies (WMB) and Expand Energy (EXE) as beneficiaries of favorable energy and global natural gas trends.

Playing defense in technology: In the S&P 500 Wednesday, money flows rotated defensively into value-priced technology investments, which included traditional megacaps in the Magnificent 7. Two major semiconductor stocks, Nvidia (NVDA and Broadcom (AVGO), moved higher, but the PHLX Semiconductor Sector Index (SOX) slipped 2%. It was weighed down by memory name Micron (MU), and storage companies Sandisk (SNDK), Seagate (STX) and Western Digital (WDC). Among the Mag 7 Apple (AAPL) was up 4%, while Microsoft (MSFT) and Google (GOOGL) each climbed about 3%. The Roundhill Magnificent Seven ETF (MAGS), which is equally weighted, rose 2.3%. ASML Holding (ASML) earnings beat expectations and the stock was up more than 2%. See Patrick Mueller Breaks Down the AI Trade, Energy Demand, and Market Rotation and Asbury Research Sees Healthy Consolidation Before Another Market Breakout

Deal chatter and bank earnings season: PayPal shares jumped nearly 17% on a Reuters report that Stripe and Advent made a joint $60.50 per share offer that would value the company at $53 billion. Morgan Stanley (MS) was the latest bank to report results; its shares rose 0.4%. Barron’s summed up profit reports from the biggest U.S. banks as “record trading revenue, soaring merger and listing activity, and staggering wealth-management gains” that have “illustrated the sector's broad-based strength.” Other big movers: BlackRock (BLK) shares jumped more than 6% on a beat that included record assets under management of more than $15 trillion. CBRE Group (CBRE) rose 6% with positive comments on commercial real estate. On the other end of the spectrum, Pentair (PNR) sank more than 14% after cutting full-year guidance, and Dell Technologies (DELL) fell about 10% on worries about lower server margins.

George Tsilis contributed to this article.

Economic Calendar, Thursday, July 16

• 08:30 AM: Retail Sales
• 08:30 AM: Jobless Claims
• 08:30 AM: Philadelphia Fed Manufacturing Index
• 10:00 AM: Business Inventories
• 10:00 AM: NAHB Housing Market Index

Earnings Calendar, Thursday, July 16

• Premarket: Taiwan Semiconductor (TSM), UnitedHealth Group (UNH), GE Aerospace (GE), Abbott Laboratories (ABT), Prologis (PLD), U.S. Bancorp (USB)

Postmarket: Netflix (NFLX), Alcoa (AA)

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