Closing Bell: Oil Surge Clobbers Dow, Broadcom Apple Deal Lifts Chips
U.S. markets were lulled from complacency Wednesday as the U.S. retaliated against Iran, and oil prices spiked just as investors digested FOMC minutes discussing rate hikes to tamp down inflation.
The S&P 500 (SPX) fell 0.28% to 7,482.71, and the Dow Jones Industrial Average ($DJI) lagged by 1%, down 576.76 points to 52,348.39. However, the PHLX Semiconductor Sector Index (SOX) rose more than 2% as individual chip names rebounded from a selloff. The tech-heavy Nasdaq-100 (/NDX) was up 0.27%.
After the market closed, the U.S. said it launched a second day of strikes on targets in Iran, in continued retaliation for Iran attacks on commercial ships in the Strait of Hormuz in recent days, according to reports.
Three things to watch in this tenuous market:
Oil prices: U.S. oil price futures were up 6% to nearly $75 per barrel on concern about greater energy shipment disruptions in the Strait of Hormuz. Rising oil prices pressured transportation and growth-sensitive stocks during regular trading, and energy stocks rallied. U.S. refiners were among the top performers in the S&P 500, with Valero Energy (VLO) up more than 6% and Marathon Petroleum (MPC) up 5.5%.
June FOMC minutes released Wednesday showed some policymakers discussed the possibility of raising interest rates to combat inflation linked to energy prices and supply constraints. The continued disruption in petroleum products and chemicals including fertilizer is a concern for agriculture, food price inflation and supply security.
Apple Buying U.S. Broadcom Chips: Broadcom (AVGO) shares were among the strongest in the large cap semiconductor space after Apple announced a multiyear commitment of more than $30 billion for production of more than 15 billion custom Broadcom chips in Colorado. Broadcom (AVGO) rose while Apple (AAPL) shares rose 0.88% to $313.31 as investors digested additional U.S. supply-chain certainty.
China Says Its Big AI Firms Can Buy Nvidia Corp (NVDA) chips: The government in China informed companies including Alibaba Group Holding Inc. (BABA), ByteDance Ltd. and DeepSeek that they can buy Nvidia H200 chips, with approval, according to The Information via Bloomberg. The caveat: the companies have to reveal how many chips they need and why. Nvidia shares jumped nearly 4% Wednesday; Alibaba ADRs jumped 11%.
Economic Events for Thursday, July 9 (ET)
- 08:30 AM: Initial Jobless Claims
- 09:00 AM: Fed Williams Speech
- 10:00 AM: Existing Home Sales (June)
Earnings Calendar for Thursday, July 9
- Premarket: PepsiCo (PEP), Simply Good Foods (SMPL)
- Postmarket: WD40 (WDFC)
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