U.S. stocks sold off Tuesday as a fresh crack in the artificial intelligence trade collided with a spike in oil prices, after Iran attacked a Qatari liquefied natural gas tanker near the Strait of Hormuz. The Nasdaq Composite led the retreat, falling 0.6%, while the S&P 500 slipped 0.2% and the Dow Jones Industrial Average shed 0.3%. The move erased part of Monday's rally, when the Dow set a fresh closing record at 53,055.91 and the S&P 500 climbed to 7,537.43.
Samsung Results Fail to Reignite AI Trade
The catalyst for the semiconductor rout came from Seoul. Samsung Electronics said it expects operating profit to jump roughly 1,800% year over year, with quarterly earnings surpassing both Nvidia and Apple. But shares tumbled 8% as investors judged the results insufficient to justify stretched valuations across the chip complex. Analysts noted that with the sector priced for perfection, even blowout numbers no longer generate follow-through buying.
The reaction rippled quickly through U.S. names. The iShares Semiconductor ETF slid roughly 7%. SanDisk dropped about 11% and Micron Technology fell 8%, while Intel and Marvell Technology each lost more than 9%. Equipment makers Lam Research and Applied Materials also sank more than 9%. In Asia, Kioxia plunged over 12% as the memory subsector bore the brunt of the selling.
DeepSeek Adds a Second Blow
Compounding the pressure, Chinese AI startup DeepSeek is reportedly building its own inference chip to sidestep U.S. export bans. By targeting the inference stage — where trained models generate outputs — rather than training workloads, DeepSeek is aiming at the fastest-growing slice of AI compute demand. The report intensified concerns that Chinese customers could eventually reduce reliance on U.S. accelerators, adding a new layer of cyclical risk to a sector already grappling with elevated multiples.
Iran Strikes Qatari LNG Tanker
Energy markets snapped in the opposite direction after Iran attacked the Qatari LNG tanker Al-Rekayyat while transiting near the Strait of Hormuz. A separate tanker in the same waterway was reportedly struck by an unidentified projectile and is believed to have suffered structural damage.
Brent crude futures settled 3% higher at $74.16 per barrel, and U.S. West Texas Intermediate advanced 2.8% to $70.44. The gains extended sharply after the closing bell when the U.S. revoked Iran's authorization to sell its oil. Brent popped 5.6% to $76.04 in after-hours trading, while WTI jumped 5.4% to $72.25.
The Strait of Hormuz handles roughly 20% of the world's oil traffic, and Tuesday's escalation raises fresh doubts about the durability of the interim peace agreement between Washington and Tehran, which are negotiating a permanent end to their war.
Market Setup
The double shock — a wobble in the AI trade and renewed Middle East risk — comes ahead of Thursday's June CPI report, scheduled for release by the Bureau of Labor Statistics on July 14. May headline CPI ran at 4.2% year over year, with energy alone accounting for more than 60% of the monthly gain. A sustained oil spike would complicate the Federal Reserve's inflation math heading into its next policy meeting, potentially reinforcing recent hawkish signals from officials.
For now, traders are navigating an unusual split-tape: defensive rotation out of high-multiple chip names, and a bid returning to energy equities as crude prices push back toward levels last seen during June's Hormuz crisis.
Sources: CNBC, Yahoo Finance, TheStreet