The three major U.S. stock indices closed mixed. While easing tensions between the U.S. and Iran led to declines in international oil prices and bond yields, semiconductor stocks, including Nvidia, fell sharply, resulting in a weaker Nasdaq index.
On July 27, the Dow Jones Industrial Average rose by 262.83 points (0.51%) to close at 52,210.08. The S&P 500 gained 1.20 points (0.02%) to finish at 7,413.18. In contrast, the Nasdaq Composite dropped 43.74 points (0.18%) to end at 24,932.08. The Russell 2000 index, which focuses on small-cap stocks, increased by 0.6%.
Expectations grew for a reduction in Middle Eastern tensions as the U.S. and Iran halted mutual attacks over the weekend. President Donald Trump stated, "We are having good conversations with Iran, and there is a possibility of an agreement." However, he warned that airstrikes could resume if negotiations fail.
With concerns about oil supply disruptions in the Middle East easing, international oil prices plummeted. West Texas Intermediate (WTI) crude fell by over 7%, dropping to around $82 per barrel, while Brent crude decreased by about 8%, settling at approximately $88. This marks a significant retreat from last week's peak of $102 per barrel for Brent.
The decline in oil prices alleviated inflation concerns, leading to a drop in bond yields. The yield on the U.S. 10-year Treasury note fell by about 3 basis points to around 4.64%.
However, semiconductor stocks experienced significant declines due to concerns over investment burdens in artificial intelligence (AI) infrastructure and competition from Chinese firms. Nvidia fell by about 5%, amid reports that it may provide financial support for OpenAI's large data center project, raising worries about increased investment pressures.
Additionally, the surge of China's largest DRAM manufacturer, Changxin Memory Technologies (CXMT), on its first day of trading dampened investor sentiment towards existing memory semiconductor companies. Concerns grew that the rapid expansion of Chinese semiconductor firms' technology and production capabilities could intensify competition.
SanDisk plummeted by over 11%, while AMD and Micron saw declines of around 5% and 2%, respectively. SK Hynix's American Depositary Receipts (ADRs) also fell by more than 7%. The Philadelphia Semiconductor Index dropped by 2.2%.
In contrast, Walmart rose by 2.1%, Microsoft by 1.9%, and Johnson & Johnson by 1%, supporting the Dow and S&P 500 indices. Occidental Petroleum fell by 4.1%, and ExxonMobil dropped by 1.4% due to the impact of falling oil prices.
Investors are closely watching the upcoming Federal Reserve's monetary policy decision and the second-quarter earnings reports from major tech companies this week.
According to the CME FedWatch, the market sees a 62% chance that the Fed will keep interest rates unchanged at this meeting, while a 38% chance exists for a 0.25% increase. The Fed's decision will be announced on July 29.
Major tech companies, including Microsoft, Meta, Amazon, and Apple, will also release their second-quarter earnings this week. Market attention is focused on whether increased AI investments will translate into actual revenue and profit growth, as well as the impact of large capital expenditures on cash flow.
* This article has been translated by AI.
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