Wall Street futures slid on Monday after a fresh U.S.-Iran clash in the Gulf pushed oil higher and hammered chip stocks. S&P 500 E-minis fell 0.31% and Nasdaq 100 E-minis dropped 0.94%, with memory-chip makers leading the retreat ahead of a heavy week of inflation data and bank earnings.
A renewed confrontation between Iran and the U.S. sent Wall Street futures lower on Monday, lifting oil prices and dragging semiconductor shares down at the open. S&P 500 E-minis fell 23.25 points, or 0.31%, while tech-heavy Nasdaq 100 E-minis dropped 283.5 points, or 0.94%. Dow E-minis slipped a slimmer 19 points, or 0.04%.
Hormuz threat sends oil higher
Markets opened the week uneasy after Iran and the U.S. exchanged attacks in the Gulf and Tehran claimed it had closed the Strait of Hormuz, a vital conduit for global energy supplies. The hostilities cast doubt on an interim U.S.-Iran agreement signed last month that aimed to reopen the strait and end the war after 60 days of talks.
Investors weighed the renewed threat to the shipping route, and crude futures rose more than 3%. The oil spike fed straight back into equity sentiment, hitting the momentum names that had powered the rally.
Chip stocks take the hit
Semiconductor shares ranked among the biggest premarket losers. Micron Technology fell 5.3%, while Western Digital, Seagate and Sandisk dropped 5.5%, 4.3% and 6.5%. U.S.-listed shares of SK Hynix fell 8.1% after a strong Nasdaq debut on Friday, and the iShares semiconductor ETF fell 2.6%.
Kathleen Brooks, research director at XTB, said the geopolitical tensions and the oil spike were disrupting the momentum trade once again, a move she expected to hit the tech and chip-stock rally.
Inflation data and earnings loom
Despite the wobble, the S&P 500 is up more than 10% this year and sits less than 1% below its early-June record close. The moves came ahead of a busy stretch of data and earnings, starting with Tuesday’s U.S. consumer price index, an inflation reading that could reset expectations for interest rates.
Major banks including JPMorgan Chase, Goldman Sachs and Morgan Stanley kick off second-quarter earnings this week, and S&P 500 earnings are expected to rise 23.7% from a year earlier, according to LSEG I/B/E/S. Markets are pricing in at least one 25-basis-point rate hike by year-end, according to LSEG data.
Source: Investing.com (Reuters)
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