Another rough start to the week. Chip stocks led everything lower again. Iran situation got worse with a new shipping blockade proposal. Oil moved higher. And somehow Tuesday brings both bank earnings and the CPI report at the same time.
Nasdaq Today: What Happened Monday
Nasdaq fell 1.55%. S&P 500 lost 0.8%. Dow slipped 0.3%. All three indexes in the red from the open.
Semiconductor index dropped 4.8%. That is the story. When chips fall that hard the rest of the market follows.
Sandisk plunged 13% again. Intel lost 6.1%. Micron dropped 4.4%. Marvell and AMD also finished lower. SpaceX fell 4.2% and is drifting back toward the $135 IPO price it listed at just over a month ago.
Selling followed overnight losses in Asia where SK Hynix and Samsung both dropped heavily and South Korea’s Kospi fell nearly 9%. That Asian session set the tone before US markets even opened.
Why Semiconductor Stocks Led the Nasdaq Lower
Not new news driving this. Same stocks. Same AI story. Just different question being asked.
Few weeks ago market was asking whether AI demand is real. Answer came back yes. SK Hynix seven times oversubscribed. Samsung projecting 19 fold profit growth. Demand is clearly there.
Monday the question shifted to whether the price is right. Stocks that went up 200% or 700% in a year need earnings that not only confirm demand is real but also justify paying that much for it. That is a harder bar to clear. Trimming positions in stocks that have had extraordinary runs does not require bad news. Just requires someone deciding they have made enough money and the risk reward at current levels is not compelling anymore.
That is profit taking with a valuation argument behind it. Different from panic selling. But the result on screen looks similar.
How Rising Oil Prices and Iran Impacted the Nasdaq
Trump reimposed a shipping blockade on Iran over the weekend. Also proposed charging 20% of cargo value for vessels using the Strait of Hormuz. Fresh military strikes continued through the weekend. Situation is not improving.
Oil moved higher on the blockade news. Higher oil means higher inflation. Higher inflation means the Fed has less reason to ease and more reason to consider another hike. That hits growth stocks and anything rate sensitive. Chips that require enormous capital investment to scale are specifically vulnerable when rate expectations move higher.
Every time the Iran situation escalates the same sequence plays out. Oil up. Inflation fear up. Rate hike probability up. Growth stocks down. Monday was another iteration of the same trade.
CPI Report and Bank Earnings Could Move the Nasdaq Today
JPMorgan, Goldman Sachs, Bank of America, Wells Fargo, and Citigroup all report Tuesday. Five of the biggest banks in the country on the same day.
Bank results matter because they show what is actually happening in the economy beneath the macro headlines. Loan demand. Credit quality. Trading revenues. Investment banking activity. Commentary from bank CEOs on economic conditions tends to move markets because they see more of the real economy than most.
June CPI also drops Tuesday. Expected to show annual inflation easing to 3.8% from 4.2%. If that comes in as expected it takes some pressure off rate hike expectations even with oil moving higher. If it comes in hotter than 3.8% the Fed conversation gets more complicated fast.
Two major catalysts on the same day after a brutal Monday creates real uncertainty about direction. Monday’s selling might look like a buying opportunity by Tuesday afternoon. Or it might get confirmed as the start of something more serious. CPI and bank earnings together will do more to answer that than any amount of analysis done Monday evening.