The U.S. stock market closed lower on July 7, driven by a decline in AI semiconductor shares despite strong earnings from Samsung Electronics. Concerns over high valuations in the AI sector led to selling pressure, while renewed tensions in the Middle East also dampened investor sentiment.
On the New York Stock Exchange, the Dow Jones Industrial Average fell 130.76 points (0.25%) to close at 52,925.15. The S&P 500 dropped 33.58 points (0.45%) to finish at 7,503.85, and the Nasdaq Composite declined 302.47 points (1.16%) to end at 25,818.69. Although the Dow reached an intraday record high, it ultimately surrendered those gains.
Semiconductor stocks led the decline. Despite Samsung's earnings outlook exceeding market expectations, investors focused on the high price pressures of AI-related stocks. The perception that strong earnings alone could not justify further price increases led to a wave of profit-taking.
The Philadelphia Semiconductor Index plummeted 4.65%. Micron Technology fell 4.7%, and SanDisk dropped 7.3%. Analysts noted that semiconductor stocks, which had surged on expectations of increased AI data center investments, were now facing high valuation pressures.
Reports that Chinese AI startup DeepSeek is developing its own AI semiconductors added to the burden. Concerns grew that reliance on established semiconductor suppliers like Nvidia and Huawei could diminish, shaking investor confidence across the sector.
However, not all sectors experienced declines. More S&P 500 stocks rose than fell, indicating that the weakness in large tech and semiconductor stocks dragged down the overall index. Among the 11 sectors in the S&P 500, eight saw declines, particularly in industrials and materials.
In individual stock movements, SpaceX fell about 7% on its first day in the Nasdaq 100 index, interpreted as profit-taking following recent gains. Conversely, payment processor PayServ rose 1.8% amid reports of discussions to sell its debit card transaction infrastructure business.
Middle East risks also heightened market pressures. Following reports of attacks on vessels near the Strait of Hormuz, tensions between the U.S. and Iran escalated. The U.S. revoked a general license that had allowed the sale of Iranian oil, contributing to rising international oil prices. West Texas Intermediate (WTI) crude briefly surpassed $72 per barrel, while Brent crude climbed to around $76.
In the bond market, the yield on the 10-year U.S. Treasury note rose to 4.549%. Investors are awaiting the release of the Federal Open Market Committee (FOMC) minutes on July 8, which will provide insights into future interest rate paths and inflation assessments under Chairman Kevin Warsh's leadership.
* This article has been translated by AI.
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