To The Moon

Shares on Wall Street gave up earlier gains and slid into negative territory as a broad selloff in chip stocks outweighed the relief from easing US-Iran tensions.

A decline in crude oil prices, driven by hopes for renewed diplomatic efforts between the United States and Iran, initially lifted markets. However, those gains evaporated by the close. The S&P 500 fell 0.2%, the Nasdaq 100 dropped 1%, while the Dow Jones Industrial Average managed a 0.4% gain.

Growing concerns over whether massive investments in artificial intelligence can generate sufficient returns triggered a 4.4% plunge in a key index tracking semiconductor giants.

Nvidia is pushing forward with another round of AI infrastructure deals, with a potential value exceeding $750 billion. This has significantly raised the cost of insuring its debt against default. Meanwhile, shares of ASML Holding NV also took a sharp hit.

With several major tech companies set to report earnings, anxiety surrounding the tech sector has reignited, overshadowing the optimism generated by lower energy costs.

Wall Street found some respite as the US and Iran refrained from attacks for a third consecutive night. US Ambassador to the United Nations Mike Waltz stated on Sunday that President Donald Trump is "leaving some space" for diplomacy, adding that both sides are in ongoing contact at technical and leadership levels.

Krishna Guha of Evercore commented, "We don't think the Fed will raise rates. Given the better-than-expected June inflation data and a clear path to a September hike if needed, an immediate rate increase right now would be unusual."

This week's earnings calls will undoubtedly focus on whether the surge in AI spending can deliver sufficient returns amid an unstable geopolitical landscape. With capital expenditures continuing to climb, companies are finding it increasingly difficult to satisfy investors.

Despite reporting solid quarterly results last week, Alphabet Inc saw its stock tumble immediately after the report due to its increased capital expenditure forecast. This sets a high bar for markets ahead of earnings from Microsoft Corp and Meta Platforms Inc on Wednesday, followed by Apple Inc and Amazon.com Inc on Thursday.

This content was provided for informational purposes only and does not constitute investment advice.