Explained – Why Nasdaq fell over 500 points on Tuesday and underperformed the Dow
Benchmark indices on Wall Street had a down day on Tuesday, July 7, with the Dow Jones also retreating from record high levels, as chip stocks sold-off yet again, after a small rebound on Monday.
The Nasdaq 100 index fell over 500 points or close to 2%, while the Nasdaq Composite was also down 1.1% at the close of Tuesday’s trade. The S&P 500 fell 0.5%, while the Dow Jones outperformed its peers, ending with modest losses of 130 points, after having made a new intraday record high of 53,289. The index eventually closed below the mark of 53,000.
Why Nasdaq Fell Over 500 Points On Tuesday?
Barring Nvidia, which ended with gains of 0.7%, chip stocks had another forgettable day, having posted losses in three out of the last four sessions.
Shares of AMD fell 6.5% overnight, while those of Intel were down 10%. Micron shares also dipped 5%. All three stocks had gained between 150% to 300% during the April-June period. The shares of memory chip manufacturers Sandisk and Western Digital also fell 8% each on Tuesday, thereby pressuring the Nasdaq.
SpaceX made its debut on the Nasdaq on Tuesday and the stock fell another 7%, tumbling back towards its IPO price of $135. This, even after multiple bullish brokerage notes, with one from Raymond James even projecting a price target of $800 for the Elon Musk-led enterprise, a 430% upside from current levels.
Why Did Chip Stocks Sell-Off On Tuesday?
Chip stocks took cue from their Asian peers Samsung Electronics and SK Hynix Inc., both of which fell up to 10% on Tuesday in South Korea.
Samsung’s operating profit jump of 19x from last year, as part of its preliminary update for the quarter, was only 6% higher than analyst expectations. Investors chose to take profits from both the Korean chip giants amidst higher expectations. The stocks are still up between 130% to 250% for the year.
Why Did Crude Oil Prices Rise?
Crude oil prices jumped overnight, a first significant move on the upside since the signing of the ceasefire agreement between the US and Iran. Brent crude surged over 5% after three commercial vessels transiting the Strait of Hormuz were reportedly attacked by Iran.
In response to those attacks, the US Central Command has launched retaliatory strikes against Iran, as per their official post on “X”.
The US treasury has also revoked the waiver granted to the sale of Iranian oil, which was in place until August 21.
What Is The Big Wall Street Trigger For Today?
While the US-Iran developments in West Asia remains a key monitorable, any further rise in oil prices will also hold the key for today’s trading session on Wall Street.
Besides the US and Iran, the street will also be awaiting the minutes of the last FOMC meeting in June, the first under new chair Kevin Warsh for further cues on the future of monetary policy.