Oil, Tariffs, Post-Earnings Selloffs Smack Mag-7
The S&P 500 ended near flat on Friday, weighed down by chip stocks, as investors assessed the latest developments regarding the Middle East conflict.
The broad market index added just 0.05% and closed at 7,411.98 while the Nasdaq Composite dropped 0.64% to end at 24,975.82.The Dow Jones Industrial Average gained 235.60 points, or 0.46%, to settle at 51,947.25. A 3.5% jump in Apple boosted the blue-chip index.
Stocks had moved higher earlier in the session, while oil prices pulled back, after Reuters, citing three Pakistani sources, reported that Pakistan is considering a path toward establishing new peace negotiations between the U.S. and Iran, with the push being initiated by China. However, obstacles to discussions with the U.S. are still high, the sources said.
Earlier this week, U.S. President Donald Trump said he will soon make a decision on whether to launch a “massive attack” on Iran after the conflict in the Middle East extended to a new battleground in the Red Sea. Speaking to Axios, the president said the proposed strikes would be bigger than anything seen in the war so far, and that Iran has not “received enough pain yet.”
“I am considering a massive attack. Bigger than ever before. I am close to making a decision. We are all set for it,” Trump said in the interview.
The New York Times on Friday reported that Trump was meeting with top advisors and his cabinet’s senior members to make a decision on whether to escalate the U.S.′ attacks on Iran.
Oil prices came off their lows after the report. Brent crude futures — which topped $100 per barrel for the first time since late May this week — eased from those levels to settle at $96.78, dropping nearly 4%. U.S. West Texas Intermediate futures fell 3% to settle at $89.31 a barrel.
Traders seemed hesitant to stay long going into a weekend that could bring more aggressive attacks on Iran.
U.S. forces have pummeled Iranian targets over the past two weeks, with Central Command completing a 13th consecutive night of strikes overnight.
“What is going on in the Middle East has the potential to create real economic outcomes with respect to restriction of hydrocarbon flows and the absorption capabilities of the global economy to deal with that,” said Bill Northey, investment director at U.S. Bank Asset Management Group.
Though Northey director believes rates will remain unchanged next week in light of this week’s spike in oil, the investment director added, “Fed Chair Kevin Warsh has been very clear about returning the U.S. economy’s inflationary level to their target and use that as a choice, and we take him at his word.”
Intel shares fell nearly 8%, reversing course from earlier gains after the chipmaker’s second-quarter results exceeded Wall Street’s expectations. Other chipmakers slid alongside it, with Broadcom off 2.7% and Advanced Micro Devices down 3.3%. Micron Technology declined 7%, and the VanEck Semiconductor ETF (SMH) pulled back 3%.
“I think you’re just seeing a lot of outsized flows move in and out of that space on a day-to-day basis, but as we step back and look at where the powerful earnings growth is, where it exists in today’s environment and what’s driving ’26 and ’27 estimates, these are the primary beneficiaries,” Northey said.
“We just have to understand that there’s going to be some sentiment flows that occur in and around the space,” he continued.
The S&P 500 and the Nasdaq booked back-to-back weekly losses, falling 0.6% and 2.1%, respectively. The Dow declined 0.4% in the period, marking its third straight losing week.
Grace O'Donnell and Jake Conley of Yahoo Finance also report the Nasdaq slips, Dow and S&P 500 recover to close a volatile week on Wall Street:
US stocks diverged on Friday as investors assessed a new set of global tariffs against a backdrop of AI jitters, rising oil prices, and elevated bond yields.
The Dow Jones Industrial Average (^DJI) rose roughly 0.5%, while the S&P 500 (^GSPC) inched above the flat line. The tech-heavy Nasdaq Composite (^IXIC) fell 0.6% as Wall Street stocks attempted to stabilize after a sharp sell-off on Thursday, led by megacap tech names.
All three major indexes posted weekly losses, led by a 2% decline for the Nasdaq over the past five days.
Stocks faced a choppy week after the "Magnificent Seven" stocks collectively shed nearly $800 billion in market value on Thursday amid a sell-off sparked by ballooning AI spending. Shares in semiconductor giant Intel (INTC) fell nearly 8% on Friday as well despite the company's results blowing past Wall Street's expectations in the second quarter.
Overnight, President Trump's latest set of global tariffs targeting nearly all US imports went into effect. The new Section 301 tariffs, which the administration hopes will better withstand legal scrutiny, levy rates of 10% to 12.5% on the US's top trading partners.
The White House exempted some energy products from those tariffs as markets contend with higher oil prices that threaten to derail progress on inflation and ripple throughout the economy. That said, S&P Global's flash PMI showed that US business activity expanded at the fastest pace in eight months in July, boosted by the World Cup.
Offsetting some of the pressure on markets, oil prices fell on Friday, with Brent crude (BZ=F) futures down 4% to trade below $96 per barrel. But the international benchmark was set for a weekly gain after touching $100 per barrel.
On the corporate front, Verizon Communications (VZ), American Express (AXP), and NextEra Energy (NEE) reported earnings beats but missed estimates on revenue.
The biggest story of the week was Tesla, Alphabet losing hundreds of billions in value in post-earnings stock plunge:
This didn’t help Mag-7 stocks this week.
What else? SpaceX (SPCX) stock stumbled to a new all-time low ahead of a major mission test tonight, just as it gambles that Starship can take over for the company's lucrative Falcon launch business:
Again this week, we see how unforgiving this market is; anything momentum-related got clobbered while energy stocks took off on mounting tensions in the Middle East.
And here are the US large-cap top and bottom performers this week (full list here):
Next week, more big tech earnings including semis which have been hit hard lately and a big Fed meeting where we will see if Chair Warsh raises rates.
Lastly, President Trump is having another tariff tantrum, hitting Canada and the EU. We shall see where this one goes.
Below, DoubleLine Deputy CIO Jeffrey Sherman joins CNBC’s Squawk on the Street to break down recent moves in U.S. Treasuries amid renewed tensions with Iran. Mr. Sherman argues the surprising strength in the long bond has less to do with oil and more to do with a broader overhang of fiscal deficits across the developed world, pointing to similar dynamics in the U.K., Germany and Japan.
He sees the real inflation signal showing up on the front end of the curve instead, and he continues to favor short duration, particularly in securitized credit, where AAA paper offers a meaningfully wider spread over Treasuries than comparable corporate bonds.
On the FOMC, Sherman thinks the committee is probably biased toward a hike, but the timing is awkward given the approaching midterms. He sees the recent repricing in the bond market as effectively doing some of that work already, giving policymakers room to stay on hold and watch how the conflict evolves rather than being forced into a decision next week.
Also, Warren Pies, 3Fourteen Research, joins 'Closing Bell Overtime' to talk what's ahead for the markets and the Federal Reserve.
Third, Jeremy Siegel, Whartons School of Business and WisdomTree, joins 'Closing Bell' to talk what's ahead for the markets and the Federal Reserve.
lastly, Charles Bobrinskoy, vice chairman at Ariel Investments, joins 'Squawk on the Street' to discuss the latest market trends, his outlook for the markets, and more.
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