Dow Sheds 273 Points, Nasdaq Drops 84 as Oil Surges Past $90 on Iran War Fears

Mumbai, Aug 18: US stock markets closed lower on Monday, with all three major indices ending in the red as escalating geopolitical tensions in the Middle East drove crude oil prices above $90 per barrel and pushed long-term Treasury yields to their highest levels in nearly two decades.  

The Nasdaq Composite declined 84.25 points, or 0.32%, to settle at 26,644.91, while the Dow Jones Industrial Average shed 272.63 points, or 0.51%, to close at 53,459.78. The broader S&P 500 fell 40.70 points, or 0.52%, ending the session at 7,745.06. The tech-heavy Nasdaq outperformed its peers, buoyed by a rally in semiconductor stocks, though broad-based risk aversion ultimately weighed on all three indices. 

Dow Plunges 273 Points as Boeing, Disney and Microsoft Lead 24-Stock Decline 

The Dow Jones Industrial Average opened the session at 53,663.11 and traded within a daily range of 53,395.23 to 53,663.11, before closing at 53,459.78. The index’s decline was broad-based, with 24 of the 30 components ending in negative territory, reflecting widespread weakness across industrial, consumer discretionary, and technology sectors. 

Among the stocks that significantly impacted the Dow, Walt Disney (DIS) emerged as the worst performer, plunging 3.13% as investors rotated out of consumer discretionary names amid rising fuel costs and geopolitical uncertainty that threatened to dampen consumer spending on travel and entertainment. Microsoft (MSFT) declined 3.04%, adding significant downward pressure to the blue-chip index as rising bond yields weighed on high-valuation technology stocks. Boeing (BA) fell 2.44%, extending its recent losses as the aerospace giant faced operational headwinds, while McDonald’s (MCD) declined 2.67% and UnitedHealth Group (UNH) dropped 1.55% as healthcare stocks came under pressure. 

On the positive side, Caterpillar (CAT) surged 2.91%, leading the gainers as industrial stocks benefited from infrastructure spending optimism and strong manufacturing data from the New York Fed’s Empire State survey. Chevron (CVX) advanced 1.36%, reflecting the positive impact of higher crude oil prices on energy companies, while Goldman Sachs (GS) gained 1.11% as financial stocks showed some resilience. American Express (AXP) slipped 1.83%, and IBM dropped 2.33%, while Cisco Systems (CSCO) rose 1.09% as technology hardware stocks outperformed software names. 

S&P 500 Falls 41 Points as Communication Services and Consumer Staples Lead Declines 

The S&P 500 opened at 7,790.68 and traded between 7,744.88 and 7,790.68, before closing at 7,745.06. Seven of the 11 sectors tracked by the benchmark ended in the red, reflecting broad-based weakness across the market. The Communication Services sector led the declines, falling more than 1%, weighed down by weakness in mega-cap names including Meta Platforms and Alphabet, while Consumer Staples also dropped over 1% as rising input costs and fuel prices threatened margins. The Information Technology sector was the only standout performer, rising 0.6% on the back of semiconductor strength. 

Among the stocks that materially impacted the S&P 500, SanDisk (SNDK) surged 8.90%, emerging as the top gainer and leading the memory stock rally that swept through the semiconductor space. The rally was fueled by renewed optimism about AI infrastructure spending, with Bloomberg reporting that AI startup Anthropic’s preliminary quarterly revenue jumped 14-fold to $11.5 billion. Applied Materials (AMAT) jumped 5.56%, while Marvell Technology (MRVL) rose 5.59%, reflecting continued investor enthusiasm for AI-related hardware companies that provide chips and equipment for data centers. Western Digital (WDC) advanced 5.08%, and Micron Technology (MU) gained 4.10%, reclaiming the psychologically important $1,000 level for the first time since July. 

On the losing side, Accenture (ACN) plunged 3.92%, leading the declines as investors soured on IT consulting stocks amid rising bond yields and concerns about corporate spending on technology services. Adobe (ADBE) dropped 3.78%, while Meta Platforms (META) fell 3.57% as the social media giant faced valuation pressure from rising rates. Constellation Brands (STZ) declined significantly, weighing on the Consumer Staples sector, while Intuitive Surgical (ISRG) fell 1.06% and Booking Holdings (BKNG) dropped 3.44%. 

Nasdaq Drops 84 Points as AI Optimism in Semiconductors Fails to Offset Mega-Cap Weakness 

The Nasdaq Composite opened at 26,784.65 and traded within a range of 26,626.38 to 26,798.40, before closing at 26,644.91. While the index was weighed down by declines in large-cap technology and communication services stocks, its losses were limited by a strong rally in the semiconductor sector, which helped cap the overall decline. The tech-heavy index’s relative outperformance compared to the Dow and S&P 500 reflected the resilience of AI-related and chip stocks amid broader market weakness. 

Among the stocks that impacted the Nasdaq, Micron Technology (MU) gained 4.10%, leading the memory chip rally as the stock crossed the psychologically important $1,000 level for the first time since July. Applied Materials (AMAT) surged 5.56%, and Marvell Technology (MRVL) advanced 5.59%, while Western Digital (WDC) rose 5.08% and SanDisk (SNDK) jumped 8.90%. The semiconductor strength was driven by renewed optimism about AI infrastructure spending, with investors focusing on companies that can benefit from increasing capital expenditures in the AI space. 

On the losing side, Adobe (ADBE) fell 3.78%, Meta Platforms (META) dropped 3.57%, and Microsoft (MSFT) declined 2.98%. Shopify (SHOP) tumbled 3.68%, while Broadcom (AVGO) fell 0.16%. Alphabet (GOOGL) declined 0.52%, and Apple (AAPL) slipped 0.12%. The weakness in mega-cap technology names was primarily attributed to rising bond yields, which typically pressure high-valuation growth stocks, as well as geopolitical uncertainty driving risk-off sentiment. 

Also Read: How to Invest in the US Stocks From India

Russell 2000 Slides 12 Points as Small-Caps Track Broader Market Lower 

The Russell 2000 Index declined 12.13 points, or 0.40%, to close at 3,056.28. The small-cap index opened at 3,060.34 and traded between 3,051.97 and 3,061.70. The index’s performance was broadly in line with the larger benchmarks, reflecting a uniform risk-off sentiment across market capitalisations. 

Among the notable movements within the Russell 2000, industrial and technology names showed mixed performance, with some small-cap semiconductor and software companies posting gains while others declined. IESC surged 5.00%, while AEIS jumped 5.56% and CECO rallied 5.67%. On the losing side, XMTR plunged 6.78%, while AVAV dropped 6.06% and COMP fell 4.91%. The energy sector within the small-cap space provided some support as oil prices rallied, with CRDO surging 8.82% and SMTC gaining 9.91%, though the overall breadth remained negative with decliners outpacing gainers by a significant margin. 

S&P 100 Declines 22 Points; Composite, Transport and Utility Averages End Mixed 

The S&P 100 Index fell 21.90 points, or 0.57%, to settle at 3,807.94, reflecting widespread weakness among the largest US corporations. The index opened at 3,832.36 and traded within a range of 3,806.62 to 3,833.73 before closing lower. The decline was driven primarily by weakness in mega-cap technology and consumer discretionary names, with Meta Platforms, Microsoft, and Disney among the top drags on the index. 

The Dow Jones Composite Average declined 52.04 points, or 0.31%, to close at 16,985.91. The index opened at 17,015.44 and traded between 16,980.30 and 17,045.66 before settling lower. The Dow Jones Transportation Average bucked the trend, gaining 52.04 points, or 0.24%, to end at 21,844.43, as energy-related transport stocks benefited from the spike in oil prices. The transportation index opened at 21,765.42 and hit an intraday high of 22,046.73 before paring gains, with railway and trucking companies serving the energy sector leading the advance. 

Conversely, the Dow Jones Utility Average fell 3.67 points, or 0.33%, to 1,108.72, as rising long-term bond yields made dividend-paying utility stocks less attractive. The utility sector opened at 1,110.49 and traded between 1,100.70 and 1,111.47, with the decline reflecting the sector’s sensitivity to interest rate movements as the 30-year Treasury yield surged to 5.31%. 

PHLX Semiconductor Index Jumps 204 Points on AI Optimism and Memory Stock Rally 

The PHLX Semiconductor Sector Index (SOX) was the standout performer, surging 203.96 points, or 1.64%, to close at 12,621.00. The index opened at 12,615.71 and hit an intraday high of 12,770.71 before paring some gains to close at 12,621.00. The strength was driven by broad-based gains across semiconductor and memory stocks, which significantly outperformed the broader market. 

The rally in chip stocks was fueled by the Roundhill Memory ETF (DRAM) advancing more than 5%, with components including SanDisk, Western Digital, Micron Technology, and Seagate Technology all posting substantial gains. The iShares Semiconductor ETF (SOXX) rose over 2.4% during the session, reflecting the broad-based strength in the sector. The semiconductor rally was primarily driven by renewed optimism about AI infrastructure spending, with Bloomberg reporting that AI startup Anthropic’s preliminary quarterly revenue jumped 14-fold to $11.5 billion, reinforcing investor confidence in continued demand for AI chips and memory products. 

NYSE Composite and Mid-Cap, Small-Cap Indices Edge Lower 

The NYSE Composite Index declined 101.94 points, or 0.41%, to settle at 24,719.74. The index opened at 24,821.68 and traded between 24,718.56 and 24,822.88 before closing lower. The performance of the NYSE Composite reflected broad-based weakness across the US equity market, with decliners outnumbering advancers by a significant margin. The index’s decline was consistent with the broader market sentiment, driven by geopolitical uncertainty and rising bond yields. 

The S&P 400 MidCap Index fell 9.85 points, or 0.25%, to close at 3,917.13, while the S&P 600 SmallCap Index lost 8.03 points, or 0.44%, ending at 1,820.25. The performance of these indices reflects a broad-based sell-off across the market spectrum, with no significant divergences between large-cap, mid-cap, or small-cap stocks. The modest declines suggest that the market weakness was driven by macroeconomic factors rather than company-specific issues, with rising oil prices and geopolitical uncertainty weighing on investor sentiment across all market capitalisations. 

Also Read: How to Invest in S&P 500 Stocks Through Index Funds 

Oil Surges Past $90 as US-Iran Ceasefire Expires 

Crude oil prices surged as the 60-day US-Iran ceasefire expired without a breakthrough, intensifying concerns over Middle East supply disruptions. Brent crude rose $2.50, or 2.82%, to $91.02 per barrel, while WTI gained $2.27, or 2.75%, to $84.67. Tensions surrounding the Strait of Hormuz, a crucial oil transit route, increased after an Iranian official warned of a possible shift towards an offensive policy. President Donald Trump also issued threats over potential interference in the strait. Meanwhile, US Strategic Petroleum Reserve stocks fell 5.3 million barrels to 293.4 million barrels, their lowest level since December 1982, while the diesel crack reached a record $102.20 per barrel. 

30-Year Treasury Yield Hits 5.31% on Fiscal and AI Debt Concerns 

US Treasury yields climbed sharply, adding pressure to equities. The 30-year yield rose 5 basis points to 5.31%, its highest since June 2007, while the 10-year yield increased 3 basis points to 4.73%. Concerns over rising government borrowing, a national debt approaching $40 trillion, heavy AI-related corporate debt issuance and persistent inflation drove the increase. The 2-year yield edged down to 4.15%, widening the 2-year/10-year spread to 53.3 basis points and further steepening the yield curve. 

VIX Surges 6.38% as Geopolitical Fears Drive Demand for Portfolio Protection 

The CBOE Volatility Index (VIX) surged 0.91 points, or 6.38%, to close at 15.16, indicating a significant increase in demand for portfolio protection. The index opened at 14.98 and traded within a range of 14.89 to 15.47. The rise in the VIX reflects heightened market anxiety stemming from the expiration of the US-Iran ceasefire and the lack of progress on a diplomatic solution. The increase in implied volatility signals that traders are pricing in a greater degree of uncertainty and potential for further market turbulence. The VIX’s move above 15 represents a notable shift from the relatively calm levels seen earlier in the month, suggesting investors are increasingly hedging against downside risks amid geopolitical uncertainty and rising oil prices. 

Technology Gains While Communication Services and Staples Lead Declines 

Information Technology was the only S&P 500 sector to post a gain, rising 0.6%, supported by strength in semiconductor and memory stocks amid renewed optimism over AI infrastructure spending and robust demand for memory products. Communication Services was the worst-performing sector, falling 1%, as weakness in mega-cap stocks such as Meta Platforms and Alphabet added to broader pressure on growth stocks from rising bond yields and geopolitical uncertainty. 

Consumer Staples also declined more than 1%, as higher fuel prices raised concerns about pressure on consumer spending and company margins. Utilities and Real Estate each fell nearly 1%, weighed down by the surge in the 30-year Treasury yield to 5.31%, which reduced the appeal of dividend-paying stocks. Consumer Discretionary declined 0.7%, dragged by Disney and McDonald’s, while Health Care fell 0.6%, Financials dropped 0.4%, and Industrials slipped 0.3%, despite gains in Caterpillar. Energy posted modest gains as higher crude prices lifted Chevron and Exxon Mobil, although concerns over weaker demand limited the sector’s advance. 

Magnificent Seven Decline as Nvidia Stands Alone in Positive Territory 

The Roundhill Magnificent Seven ETF (MAGS) declined more than 1% on Monday, reflecting broad-based weakness among the mega-cap technology names. Nvidia (NVDA) was the only Magnificent Seven stock to end in positive territory, though with a marginal gain of just 0.07%. The chipmaker was supported by the semiconductor rally and renewed optimism about AI infrastructure spending, with investors focusing on companies that can benefit from increasing AI capital expenditures. 

Meta Platforms (META) led the Magnificent Seven lower with a decline of 3.57%, followed by Microsoft (MSFT) which fell 2.98%. Alphabet (GOOGL) declined 0.52%, while Apple (AAPL) slipped 0.12%. Amazon (AMZN) fell 0.51%, and Tesla (TSLA) dropped 0.85%. The weakness in the Magnificent Seven was primarily attributed to rising bond yields, which typically pressure high-valuation growth stocks, as well as geopolitical uncertainty driving risk-off sentiment and concerns about the sustainability of AI spending at current levels. 

Also Read : US Stock Market Timings

Semiconductor and Memory Stocks Outperform as AI Optimism Drives Gains 

Semiconductor and memory stocks outperformed the broader market, with the iShares Semiconductor ETF (SOXX) rising over 2.4%. Memory chipmakers led the rally, with SanDisk surging 8.90%, Western Digital gaining 5.08%, Micron Technology rising 4.10% and Seagate Technology advancing 2.18%. The Roundhill Memory ETF (DRAM) also climbed more than 5%, reflecting broad strength across the memory segment. 

The gains were driven by renewed optimism over AI infrastructure spending and expectations of sustained demand for chips and memory products. Bloomberg’s report that Anthropic’s preliminary quarterly revenue rose 14-fold to $11.5 billion further supported the AI growth narrative. 

Financial stocks were mixed, with Goldman Sachs rising 1.11% while JPMorgan Chase fell 0.48%. Energy stocks gained alongside higher crude prices, with Chevron up 1.36% and Exxon Mobil also trading higher. 

Empire State Manufacturing Survey Hits Four-Year High of 20.6 

The New York Fed’s Empire State Manufacturing Survey rose to 20.6, its strongest reading in more than four years and above the Dow Jones estimate of 12. The index increased from 15.6 in July, signalling stronger factory activity. New orders and shipments remained in expansion territory, while unfilled orders jumped 10 points to 15.5, indicating rising backlogs. Employment eased to 9.3 from 10.2, while prices paid increased to 24.3, highlighting continued input-cost pressures. Meanwhile, US retail sales fell 0.6% in July, missing expectations for a 0.1% rise. 

Fed Rate Hike Odds Fall to 31% as Bullard Urges Immediate Tightening 

Markets sharply reduced expectations for a September Federal Reserve rate hike, with futures pricing implying a 31% probability of a 25-basis-point increase, down from roughly 50% a week earlier. Former St. Louis Fed President Jim Bullard argued that the Fed should raise rates now to bring inflation towards 2%. Investors are awaiting the FOMC meeting minutes for further guidance on monetary policy. 

Gold and Copper Rally as Dollar Weakens 

Gold futures rose 0.9% to $4,475 per ounce, supported by a weaker dollar and reduced rate-hike expectations. Spot silver jumped nearly 3% to $66.54, while copper reached a six-month high of $14,310 per metric ton amid concerns over low LME inventories. US natural gas futures fell 1.6% to $2.69 per million British thermal units on record output and expectations of milder weather. 

Dollar Falls as Rate-Hike Bets Retreat 

The US Dollar Index declined 0.1% to 99.57, its lowest level since early June. The euro rose to $1.1583, while the yen and pound also strengthened against the dollar. The weaker greenback reflected reduced expectations for a September rate hike, although geopolitical tensions and higher oil prices continued to support safe-haven demand. 

The US-Iran ceasefire expiry, oil prices above $91, and the 30-year Treasury yield reaching 5.31% created significant headwinds for equities. However, semiconductor gains supported Nasdaq outperformance amid AI optimism. Markets now await Wednesday’s Fed minutes and earnings from Walmart and Home Depot. The Empire State Manufacturing Survey’s four-year high of 20.6 indicated economic resilience, while 31% Fed hike odds reflected cautious optimism. 

Source 

• https://www.nasdaq.com/ 

• spglobal.com/spdji/en/indices/equity/sp-500/ 

• https://www.dowjones.com/ 

• https://www.spglobal.com/spdji/en/indices/equity/dow-jones-industrial-average/ 

• https://www.spglobal.com/spdji/en/indices/equity/sp-500/ 

• https://www.nasdaq.com/market-activity/index/comp 

• https://www.nasdaq.com/market-activity/quotes/nasdaq-ndx-index 

• https://www.spglobal.com/spdji/en/indices/equity/sp-100/ 

• https://www.lseg.com/en/ftse-russell/indices/russell-us 

• https://www.nyse.com/index 

• https://www.nyse.com/index 

• https://www.spglobal.com/spdji/en/indices/equity/dow-jones-transportation-average/ 

• https://www.spglobal.com/spdji/en/indices/equity/dow-jones-utility-average/ 

• https://www.spglobal.com/spdji/en/indices/equity/dow-jones-composite-average/ 

• https://www.nasdaq.com/market-activity/index/sox 

• https://www.cboe.com/tradable_products/vix/