Oil prices experienced a significant increase on Monday, driven by renewed conflict in the Middle East, while stock markets saw a downturn, particularly affecting technology companies involved in the artificial intelligence boom.
Brent crude oil, the international benchmark, rose 3.9% to $78.95 per barrel. This rise followed statements from both the United States and Iran asserting control over the Strait of Hormuz. Disruptions to oil tanker traffic through this critical waterway, a key route for crude delivery from the Persian Gulf, have historically led to global fuel price hikes.
Earlier in the day, Brent crude prices briefly approached $80 per barrel after President Donald Trump proposed a 20% toll on cargo passing through the strait to offset U.S. military protection costs. However, prices moderated thereafter, remaining well below the nearly $120 per barrel peak reached during previous wartime periods.
On Wall Street, the S&P 500 index fell by 0.3%, retracting from its fourth winning week in the past five. The Dow Jones Industrial Average saw a slight decrease of 65 points, or 0.1%, while the Nasdaq composite was down 0.7% as of 11 a.m. Eastern time.
Companies specializing in computer chips, such as Micron Technology, were among the hardest hit, with Micron's stock sinking 3.8%. This decline eroded some of the substantial gains the company had seen earlier in the year, attributed to the surging demand for computer memory and components driven by the AI surge. However, concerns are mounting that stock valuations may have become excessively high and that the current demand levels may not be sustainable if AI fails to deliver projected profits and productivity gains.
Nvidia, the largest stock on Wall Street by market value, fell 1.7%. Its significant weighting in the S&P 500 made it the heaviest drag on the index.
The day's market declines began in Asia, with South Korea's Kospi index dropping 8.9%. This included a 15.4% plunge in the stock of SK Hynix, the largest single-day drop since the company began trading in 1997. The South Korean tech firm had recently launched its shares in the United States on Friday, raising approximately $26.5 billion, with those shares initially jumping 13.1% on their first trading day before falling 6.4% on Monday.
Despite broader market pressures, some areas of the AI industry showed resilience. Taiwan Semiconductor Manufacturing Co. (TSMC) saw its shares in Taiwan rise by 1%. The chipmaker reported that its June revenue increased by nearly 68% year-over-year, contributing to a 35.6% growth in total revenue for the first half of the year compared to the previous year. However, TSMC's shares traded in the United States declined by 0.4%.
Traders work on the floor at the New York Stock Exchange in New York, Monday, July 6, 2026. (AP Photo/Seth Wenig)
This week, much of Wall Street's focus will be on corporate earnings reports for the spring quarter. Major banks including Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, and Wells Fargo are scheduled to release their latest quarterly results on Tuesday alone.
Analysts currently forecast that companies within the S&P 500 index will report an overall earnings growth of 23.6% compared to a year earlier, according to FactSet. If this forecast holds, it would mark the second consecutive quarter of growth exceeding 20%.
Strong performance across industries will be crucial for companies to justify recent stock price movements. The major indexes are trading near record highs despite recent volatility, fueled by investor sentiment surrounding AI stocks.
Historically, companies have consistently surpassed analysts' expectations, with the S&P 500 companies achieving this in 37 of the past 40 quarters. Should this trend continue, earnings growth for the latest quarter could represent the strongest performance since 2021.
In the bond market, Treasury yields rose in tandem with oil prices. The yield on the 10-year Treasury increased to 4.59% from 4.56% at the close of trading on Friday, and significantly higher than the 3.97% recorded before the conflict with Iran began.
Global yields have been on the rise due to concerns over elevated oil prices and inflation, which could prompt the Federal Reserve and other central banks to consider interest rate hikes. While higher rates can help curb inflation, they also risk slowing economic activity and negatively impacting investment prices.
In international stock markets, European indexes mostly saw modest movements. Asian markets experienced sharper fluctuations, with Shanghai stocks falling 2.1% and Japan's Nikkei 225 dropping 1.9%, in addition to South Korea's significant decline.