Semiconductor stocks fell and oil prices edged lower on Monday, leaving the S&P 500 with only a narrow gain while the Nasdaq slipped and the Dow closed higher. Chip stocks came under pressure after a report that China had begun developing deep ultraviolet lithography machines, sending ASML's U.S.-listed shares lower. Wednesday's Fed decision and quarterly reports from four megacap technology companies come next.
The S&P 500 eked out a narrow gain on Monday, ticking up 0.02%, as chip stocks began to recover from their selloff earlier in the session and oil prices edged lower. The Nasdaq Composite lost 0.18%. By contrast, the Dow Jones Industrial Average closed 262 points higher, or roughly 0.5%.
Chinese chipmaking report drags semiconductors lower
Semiconductor stocks were down broadly, although they bounced off their session lows. The VanEck Semiconductor ETF traded roughly 2% lower, adding to its Friday losses, while AMD and Teradyne dropped 4% and 5% respectively to lead the declines.
Chipmakers had rallied earlier in the day after Chinese chipmaker CXMT's IPO on the Shanghai Stock Exchange. But equities came under pressure after The Information reported, citing sources familiar with the matter, that China had begun developing deep ultraviolet lithography machines, which are used to build semiconductors. U.S.-listed shares of ASML, the dominant player in the space, fell more than 8% on the back of the report.
The PHLX chip index dropped 3.5% and was down about 22% from its record high close on June 22. Thomas Martin, senior portfolio manager and partner at Globalt Investments, pointed to Chinese companies when he told CNBC: "There's just a lot of uncertainty about what is happening with Chinese companies."
Oil slides as the U.S. and Iran pause attacks
Oil prices slipped as the U.S. and Iran paused their attacks. International benchmark Brent crude futures for September delivery fell 8.7% to around $88.36 a barrel. U.S. West Texas Intermediate crude futures settled down 7.5% to $82.61 a barrel.
Fed decision and megacap earnings come next
The Fed will make its latest decision on interest rates on Wednesday. Traders are projecting a 62% chance the central bank will leave rates unchanged, with a 38% chance of a 25 basis-point rate hike, according to the CME FedWatch tool.
Then come the earnings. A succession of quarterly reports from Amazon, Apple, Meta Platforms and Microsoft will either soothe investor fears of rampant artificial intelligence spending, or add to them, after Alphabet's disappointing results in the last week. Those results could directly affect the semiconductor companies that are the chief beneficiaries of the AI spending spree.
Sources: CNBC, Investing.com
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