The three major U.S. stock indices closed lower as rising international oil prices dampened investor sentiment. This decline followed reports that Iran is considering restrictions on the passage of vessels from 'hostile nations' such as the U.S. and Israel through the Strait of Hormuz. Additionally, disappointing earnings and forecasts from some tech companies added to the market's woes.
On August 6, the Dow Jones Industrial Average fell by 464.02 points, or 0.85%, to close at 53,885.10. The S&P 500 index, which is heavily weighted toward large-cap stocks, dropped 13.52 points, or 0.18%, to finish at 7,710.03. The tech-heavy Nasdaq Composite Index decreased by 15.09 points, or 0.06%, ending at 26,348.35. Both the Dow and S&P 500 retreated from their previous record highs.
International oil prices surged again, raising concerns about inflation and interest rates. Iran's semi-official Fars news agency reported that a parliamentary committee is reviewing a bill to prohibit vessels from 'hostile nations' from transiting the Strait of Hormuz. The proposed legislation reportedly includes fines of up to 20% of the cargo value for violators.
West Texas Intermediate (WTI) crude rose 2.75% to $77.29 per barrel, while Brent crude increased by 3.83% to $82.49. The renewed tensions surrounding the Strait of Hormuz have dampened recent optimism regarding a potential agreement between the U.S. and Iran.
The rise in oil prices has heightened inflation concerns, leading to an increase in Treasury yields. The yield on the 10-year U.S. Treasury note rose from 4.617% to 4.668%. Market participants remain wary that if inflation does not subside, the Federal Reserve may consider raising interest rates.
Stock volatility was pronounced due to earnings reports. Western Digital shares plummeted by 13%, while SanDisk fell 6.8%. Both companies had projected quarterly revenues that exceeded market expectations, but investors felt these figures did not meet the heightened expectations driven by artificial intelligence and rising memory prices.
Memory semiconductor stocks also experienced significant declines early in the session. Micron Technology briefly dropped more than 7% but later recovered most of its losses, closing down 1.3%. SK Hynix's American Depositary Receipts (ADRs) fell by 5%, amid concerns that the earnings reports from SanDisk and Western Digital could signal a slowdown in memory price increases.
Software companies also struggled. Digital advertising platform AppLovin saw its quarterly revenue fall short of market expectations, resulting in a 19.7% drop. Cloud security firm Datadog projected a slowdown in revenue growth for the third quarter, leading to a 19% decline in its stock.
In contrast, SpaceX shares rose 6.1% despite the lifting of restrictions on stock sales by early investors and employees. Concerns about a potential large sell-off did not materialize as the actual selling pressure was less than anticipated.
Investors are closely watching the U.S. jobs report set to be released on August 7. Earlier data showed a slight increase in weekly jobless claims, but layoffs were at their lowest level in two years. The employment figures are expected to influence the Federal Reserve's future interest rate decisions.
* This article has been translated by AI.
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