Middle East Tensions Push US Stocks Lower; AI Chip Shares Attempt Rebound

Dow Falls 0.59%; Nasdaq Slips 0.05%

Brent Gains 1.27%; WTI Rises 0.9%

Major US stock indexes closed lower on July 20 as geopolitical tensions in the Middle East weighed on sentiment. Bargain hunting in artificial intelligence and semiconductor shares, however, helped limit the declines.

The Dow Jones Industrial Average fell 307.16 points, or 0.59%, to 51,839.26 at the close on the New York Stock Exchange.

The S&P 500 dropped 14.41 points, or 0.19%, to 7,443.28, while the tech-heavy Nasdaq Composite slipped 12.17 points, or 0.05%, to 25,508.07. The Philadelphia Semiconductor Index rose 0.6%.

Sentiment improved early in the session on reports that diplomatic contacts between the US and Iran were continuing. Stocks later turned lower again as uncertainty over the Middle East resurfaced.

Geopolitical tensions escalated after Yemen's Iran-backed Houthi militants declared a maritime blockade against Saudi Arabia. US President Donald Trump also wrote on Truth Social that Iran would "pay many times over."

Oil prices rose as well. Brent crude futures for September settlement, the global benchmark, climbed 1.27% to $89.22 a barrel. West Texas Intermediate crude futures for August settlement rose 0.90% to $83.23 a barrel.

Still, sentiment steadied after Iran's foreign ministry said back-channel diplomacy with the US was continuing. Bargain buying also returned to AI and semiconductor stocks, which had recently come under sharp pressure.

Micron Technology gained 1.94%, while Advanced Micro Devices and Astera Labs rose 1.58% and 1.80%, respectively. Nvidia climbed more than 2% during the session but gave back most of those gains to end up 0.23%.

By contrast, SK Hynix's American depositary receipts fell 1.86%.

Investors were also cautious ahead of earnings from major technology companies. Alphabet, Tesla and Intel are set to report this week, followed next week by Microsoft, Meta, Apple and Amazon.

Kim Yeon-ji, Hankyung.com reporter kongzi@hankyung.com