The three major U.S. stock indices fell sharply, led by significant declines in shares of Alphabet and Tesla, as rising international oil prices and U.S. Treasury yields dampened investor sentiment in the tech sector.
On July 23, the Dow Jones Industrial Average closed down 506.93 points (0.97%) at 51,711.65. The S&P 500 dropped 90.66 points (1.21%) to finish at 7,408.30, while the tech-heavy Nasdaq Composite plummeted 553.21 points (2.15%) to close at 25,137.69.
Alphabet and Tesla were the primary drivers of the market decline.
Alphabet, Google's parent company, reported second-quarter earnings that exceeded market expectations. However, concerns over the financial burden of its substantial investments in artificial intelligence (AI) led to a 7% drop in its stock price. The company also raised its capital expenditure forecast to as much as $200 billion, increasing investor caution.
Tesla's stock fell 14.5% after its second-quarter results fell short of market expectations, coupled with worries about cash flow deterioration due to expanded investments in AI and robotics.
The sharp declines in these two stocks contributed to a 5.20% drop in the S&P 500's communication services sector and a 5.12% decline in consumer discretionary stocks. On the New York Stock Exchange, the number of declining stocks outnumbered advancing stocks by nearly three to one.
Rising international oil prices also added pressure to the stock market. Amid escalating military tensions in the Middle East, Brent crude oil surged 7% to close at $100.69 a barrel, surpassing the $100 mark for the first time since May. West Texas Intermediate (WTI) crude also jumped 6.2% to $92.19 a barrel.
Concerns over potential disruptions to oil supply grew after Yemen's Iran-aligned Houthi rebels attacked a Saudi oil tanker in the Red Sea, and ongoing military clashes between the U.S. and Iran continued.
The rise in oil prices raised fears of renewed inflation, leading to a spike in U.S. Treasury yields. The yield on the 10-year Treasury note reached as high as 4.7% during trading, marking its highest level since January 2025. Rising interest rates tend to lower the present value of future earnings, placing a heavier burden on growth and tech stocks.
In contrast, defense stocks performed well. Lockheed Martin raised its earnings outlook for the year, resulting in a 10.5% increase in its stock price, while RTX rose 7.3%. Consequently, the S&P 500 industrials sector gained 1.77%, the highest increase among the 11 sectors.
Semiconductor stocks experienced relatively limited declines, with the Philadelphia Semiconductor Index falling 0.5%. Texas Instruments provided a revenue forecast that exceeded market expectations, yet its stock fell 3%.
After the market closed, Intel reported second-quarter earnings that surpassed expectations, along with a positive outlook for the third quarter. The company posted a 25.4% year-over-year increase in revenue to $16.13 billion, with adjusted earnings per share (EPS) of 42 cents. Following the earnings announcement, Intel's stock rose in after-hours trading.
* This article has been translated by AI.
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