PANews reported that Wall Street is repricing a mix of higher oil, higher inflation and higher rates after the Trump administration formally launched a new 10%-12.5% tariff plan covering about 60 economies and tensions in the Middle East continued to rise. U.S. stocks closed lower across the board, with the Dow Jones Industrial Average down 0.97%, the S&P 500 off 1.21%, and the Nasdaq falling 2.15%. Growth and technology names took the brunt of the selling.
Brent crude briefly breaks above $100
Geopolitics became the biggest market driver. Trump said he was seriously considering a larger military action against Iran. Iran rejected a U.S. ceasefire proposal and said it would not accept an agreement that failed to address the Strait of Hormuz.
With traders worried that energy shipments through the Red Sea and the broader Middle East could face more disruption, Brent crude futures jumped 7.1% intraday and moved above $100 before pulling back sharply. The contract then fell nearly 14% to around $86. Spot Brent and WTI were later trading around $94 and $92, respectively.
Bob McNally, president of Rapidan Energy Group, said a second phase of the conflict would be broader and would put energy infrastructure at significant risk. A US Bank wealth management strategy head also warned that $100 oil would deal a severe blow to consumer spending by late summer.
Treasury yields surge as rate-hike bets build
Inflation concerns pushed Treasury yields sharply higher. The 2-year yield, the most sensitive to Fed policy, rose to 4.37%, its highest level since early 2025. The 10-year yield climbed to about 4.70%, a new high for the year. The 30-year yield rose to roughly 5.2%, marking 14 straight trading days above 5%, the longest such streak since 2007.
The 30-year real yield approached 3%, the highest level since 2008. Demand was weak at Thursday's $21 billion auction of 10-year Treasury Inflation-Protected Securities, where the stop-out real yield came in at 2.438%, another sign that investors were demanding more compensation for inflation.
Rate-cut expectations on Wall Street faded quickly. CME data showed the probability of a 25-basis-point Fed rate increase next week jumped from 10% to 38% within one week. A JPMorgan trading executive said that under Fed Chair Warsh's "say less, do more" style, the market is effectively left to price policy on its own, and $100 oil has become the clearest rate-hike catalyst.
According to the report, traders are now focused on three near-term variables: whether the Middle East conflict escalates further, how global trade reacts once the new U.S. tariffs take effect, and what signals come out of next week's Federal Open Market Committee meeting. If oil stays elevated, Treasury yields could move higher still, keeping pressure on richly valued growth stocks.
AI demand holds up, but investors question the spending bill
PANews said the sell-off in tech was not driven by a collapse in AI demand. The issue was more immediate: investors want to know when heavy AI investment will start turning into profits.
Google Cloud continued to post strong growth. Intel's data center business beat expectations, and AMD rolled out new AI platforms. Those signals point to ongoing demand. But Google and Tesla both saw free cash flow turn negative. Business may still be expanding, yet spending on AI and future projects is outpacing incoming cash.
The Magnificent Seven all fell. The Wind U.S. Tech Seven Index lost 3.86%, while the Roundhill Magnificent Seven ETF dropped 4.63%. Tesla sank 14.52%, Google fell 7.13%, Amazon lost 4.57%, Meta dropped 3.36%, Microsoft fell 2.24%, Nvidia lost 1.56%, and Apple slipped 1.30%. Combined, the seven companies shed nearly $800 billion in market value in a single day.
Company moves and earnings details
- Intel closed down 2.33%, then rose more than 13% after hours. Second-quarter revenue increased 25% from a year earlier, the strongest growth in 15 years. AI and data center revenue climbed 59% year over year, and third-quarter guidance beat expectations across the board. CEO Chen Liwu said AI is driving global demand for computing power to unprecedented levels.
- Tesla tumbled 14.52%, its biggest one-day drop in nearly a year. Profit and free cash flow both missed expectations. Operating profit was $398 million, down 57% year over year, and free cash flow came in at negative $1.09 billion, the first negative reading in nearly two years. The report said Tesla is cutting prices to protect unit sales while spending aggressively on AI, autonomous driving and robotics. Elon Musk also confirmed that this year will be a major one for capital expenditures. BNP Paribas said Tesla's share price already reflects very high AI expectations but the pace of delivery remains uncertain, so it kept a rating equivalent to sell and a $280 price target.
- Google fell 7.13%. Second-quarter revenue rose 24% year over year, and cloud revenue increased 82%, but heavier capital expenditures pushed free cash flow negative for the first time. The company also raised its full-year capital spending plan again, fueling concern over returns on AI investment.
- AMD lost 2.29%. The company introduced new AI products including Helios and Venice and expanded into AI inference with Cerebras. PANews said the long-term outlook remains constructive, but the stock still closed lower by about 2% because valuations were already high.
- Oracle fell 4.61% to a 52-week low, then gained about 2% after hours on a military contract. The stock dropped to around $120, down more than 52% from its roughly $250 peak in June. Investors are questioning whether spending on cloud and AI infrastructure is running too far ahead of visible returns. After the close, Oracle won a 10-year software services contract from the U.S. Department of War that could be worth as much as $6.99 billion if all renewals are exercised.
- SpaceX fell as low as $110.85 intraday, a record low, but ended up 2.59%. The company again delayed a major Starship flight test because of weather. The mission is expected to carry upgraded Starlink satellites. PANews described Starship as central to Musk's plans for space-based data centers, Starlink expansion, and longer-term Moon and Mars ambitions.
Chip names hold up better, defense stocks act as a refuge
Semiconductor and storage shares were relatively resilient. The Philadelphia Semiconductor Index slipped 0.54%. Micron rose 3.20%, SK Hynix gained 2.56%, SanDisk added 0.69%, Seagate Technology rose 0.58%, and Western Digital edged up 0.29%.
Defense names outperformed. Lockheed Martin climbed 10.54% and RTX rose 7.33%. PANews said the more severe the Middle East tension becomes, the more investors expect defense orders to increase.
What markets are watching next
Two events on July 24 are next in focus. First, the new U.S. tariffs are set to take effect. If they lift import costs, corporate margins could come under pressure, and some of those costs may be passed on to consumers, adding to inflation concerns.
Second, CATL is due to report earnings on July 24. Markets will be watching power battery demand, energy storage operations, gross margin and overseas orders. The results could shape sentiment across the new energy supply chain.