Nasdaq Falls 1.16% as Chip Stocks Slide and Oil Surges on Middle East Tensions

U.S. stocks closed lower on July 7 as semiconductor shares tumbled and oil prices jumped. A broad selloff in chipmakers spread to Wall Street even after Samsung Electronics reported earnings that beat forecasts. Renewed tensions in the Middle East further chilled investor sentiment.

The Dow Jones Industrial Average fell 130.76 points, or 0.25%, to 52,925.15. The S&P 500 dropped 33.58 points, or 0.45%, to 7,503.85. The Nasdaq Composite slid 302.47 points, or 1.16%, to 25,818.69.

Samsung Electronics topped estimates a day earlier, but its shares fell on concerns over future spending and demand. The decline reverberated across New York trading. Intel sank 9.7% and Micron Technology lost 4.7%, while KLA, Marvell Technology, Broadcom and AMD also fell.

The Philadelphia Semiconductor Index tumbled 4.65%, and the VanEck Semiconductor ETF (SMH) fell 3.8%. With expectations for artificial intelligence-fueled tech stocks already high, investors are turning to sectors that have lagged, including health care and financials.

Renewed geopolitical tensions in the Middle East surrounding the Strait of Hormuz also weighed on stocks. U.S. Central Command said in a post on X that it had launched a series of powerful airstrikes "to impose a heavy cost" in response to attacks targeting merchant vessels carrying innocent civilians in international waters.

Oil prices surged after reports that three ships passing through the Strait of Hormuz had come under attack since the previous day. Brent crude for September delivery rose 3.01% to settle at $74.16 a barrel, while West Texas Intermediate for August delivery gained 2.76% to $70.44. It was the biggest daily increase for both contracts since June 1.

Investors are increasingly questioning whether the rally in semiconductor stocks has gone too far. Morgan Stanley said momentum in the sector is weakening as investors rotate into relatively underperforming areas, including hyperscalers.

Earnings season will begin in earnest next week, starting with major U.S. banks. If technology companies, especially hyperscalers, fail to beat already-optimistic market expectations, that could trigger a broader pullback in tech shares.

Kang Kyung-ju, Hankyung.com reporter qurasoha@hankyung.com