U.S. forces carried out a "series of powerful strikes" against Iran late Tuesday after the Middle Eastern country struck three commercial ships passing through the Strait of Hormuz.
- Oil prices climbed higher following the attacks, rising above $70 a barrel.
- Meanwhile, investors once again rotated out of technology and AI stocks, moving into more traditional industries like healthcare and financials.
- Investors will be watching the minutes of the Federal Reserve’s June meeting, expected on Wednesday.
U.S. stock futures were mixed in the overnight session late Tuesday ahead of the release of the minutes from the Federal Open Market Committee’s (FOMC) June meeting.
Meanwhile, Washington revoked Iran’s license to sell oil in response to attacks on three commercial vessels in the Strait of Hormuz.
Dow futures were down 0.02%, S&P 500 futures climbed 0.16%, and Nasdaq-100 futures gained 0.55% at 9:14 PM EDT.
Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY) and the Invesco QQQ Trust (QQQ) were trading higher at the time of writing, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) was down.
The iShares 20+ Year Treasury Bond ETF (TLT) was trading down 0.07% amid ‘bearish’ sentiment.
How Did US Markets Fare On Tuesday?
During Tuesday's session, the Dow Jones Industrial Average shed about 130 points, closing down 0.25%. The S&P 500 fell 0.45%, and the Nasdaq Composite lost 1.16%, as a selloff in semiconductor stocks weighed on the index.
| Index | Move | Close |
| Dow Jones Industrial Average | - 0.25% | 52,925.15 |
| S&P 500 | -0.45% | 7,503.85 |
| Nasdaq Composite | -1.16% | 25,818.69 |
Meanwhile, oil prices rose following the attacks in the Strait and the U.S.’s response, climbing above $70 a barrel. At the time of writing, Brent crude futures expiring in August were trading at around $76.22 per barrel. Meanwhile, WTI crude futures expiring in August gained nearly 3% to trade at $72.49 per barrel.
US Market Drivers
U.S. stock markets pulled back from record levels on Tuesday amid a selloff in technology stocks and a re-escalation of conflict between the U.S. and Iran.
Iran struck three commercial ships passing through the Strait of Hormuz, including Qatari and Saudi Arabian oil tankers, threatening the fragile peace deal with the U.S.
In response, U.S. forces carried out a "series of powerful strikes" against Iran late Tuesday. “U.S. Central Command forces have begun launching a series of powerful strikes against Iran to impose heavy costs for targeting and attacking commercial shipping crewed by innocent civilians in an international waterway,” the U.S. Central Command said in a post on X.
“The U.S. strikes are in response to Iranian attacks on three commercial vessels that were transiting the Strait of Hormuz. Iran’s demonstrated aggression was unwarranted, dangerous, and a clear violation of the ceasefire.”
“Moments ago, the United States revoked the General License that lifted sanctions on Iran oil. The significance of this move cannot be overstated,” Brett Erickson, managing principal at Obsidian Risk Advisors, said in a post on X. “It is a complete destruction of the Memorandum of Understanding between the United States and Iran.”
“Between the revocation of the Iranian oil sanction waivers earlier today, and now this…” he added in a separate post, referring to the U.S.’s attacks on Iran. “Hard to view it as anything but a full return to war and the destruction of the MOU.”
Meanwhile, investors once again rotated out of AI stocks and into more traditional industries. Shares of top chipmakers declined, with Micron Technologies (MU) falling nearly 5% at close, Sandisk Corp. (SNDK) losing more than 7%, and Advanced Micro Devices Inc. (AMD) falling by over 6% at close. The VanEck Semiconductor ETF (SMH) slumped nearly 4% on Tuesday.
“Expectations are up, and fundamentals are struggling to meet these sky-high demands, and that’s what’s fueling today’s decline,” Mike Bailey, director of research at FBB Capital Partners, reportedly told CNBC. “I would expect the rotations that we’ve seen to continue.”
Meanwhile, investors appeared to pivot to other key industries such as healthcare and financials. Shares of Eli Lilly (LLY) gained almost 3% and Merck & Co Inc. (MRK) was up more than 1.6% at close. JPMorgan Chase & Co. (JPM), PayPal Holdings Inc. (PYPL), and Fiserv, Inc. (FISV) all closed in the green.
Elon Musk’s SpaceX (SPCX) also garnered significant attention on Tuesday following its inclusion in the Nasdaq-100 index. The shares fell nearly 7% at close and also dropped below their IPO price during the trading session.
Investors’ focus will now shift to the minutes from the Fed’s June meeting, expected on Wednesday. The document is expected to provide cues on the stances of various policymakers following the central bank’s decision to hold interest rates steady.
Trending Stocks To Watch
Fuelcell Energy Inc. (FCEL): Shares of the fuel cell energy company tumbled more than 12% at close on Tuesday and continued to decline in the overnight session after it announced plans to sell $200 million in new common stock, stoking dilution concerns.
T1 Energy Inc. (TE): The clean energy company jumped onto the retail radar after posting a sharp decline of nearly 20% on Tuesday, two days prior to the expiry of public warrants from the NYSE.
Navitas Semiconductor Corp. (NVTS): The company’s stock plummeted more than 4% after hours following an announcement from Wolfspeed Inc. (WOLF) that it had filed a patent infringement lawsuit against Navitas Semiconductor for infringement on its "foundational" gallium nitride (GaN) and silicon carbide (SiC) intellectual property portfolio.
Micron Technology Inc. (MU): Shares of the memory chip maker also jumped onto the retail radar amid a selloff in semiconductor stocks.
Global Market Trends
U.S. Treasury yields inched higher on Tuesday amid further escalations with Iran and growing inflation concerns. Yields on the 30-year Treasury moved past the key 5% level, while yields on the 10-year Treasury rose to 4.557% at the time of writing.
Spot gold prices climbed to around $4,108.39 an ounce, while spot silver prices were trading at around $60.06 an ounce at the time of writing.
Asian markets traded mixed at the open on Wednesday. South Korea's KOSPI climbed 1.22% at the time of writing, bolstered by an increase in Samsung and SK Hynix shares. Japan’s Nikkei 225 also edged higher at the open.
Meanwhile, China’s SSE Composite index and Australian stocks were trading lower at the open.
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