Written by: Tide Research

Due to multiple factors including attacks on tankers in the Strait of Hormuz, the U.S. withdrawing the exemption for Iranian oil sales, and profit-taking sell-offs triggered by Samsung's earnings release, tech stocks are under noticeable pressure. Brent crude oil once increased by over 6% during the day, with the rebound in oil prices directly boosting inflation expectations, causing U.S. Treasury yields to rise across the board, with the 30-year Treasury rate surpassing 5%. Defensive sectors and energy stocks took the lead, while the Philadelphia Semiconductor Index hit a new low since June.

Market Performance

The S&P 500 fell by 0.45% to 7503.85 points. The Dow Jones dropped by 0.25% to 52925.15 points. The Nasdaq decreased by 1.16% to 25818.69 points. The Nasdaq 100 fell by 1.77% to 29173.017 points. The Russell 2000 decreased by 0.90% to 2982.488 points. VIX increased by 3.60% to 16.13.

The Philadelphia Semiconductor Index dropped by 4.65%, closing at 12300.516 points, marking a new low since June 10. Intel fell by 10.1%, AMD dropped by 6.51%, TSMC ADR decreased by 4.23%, Western Digital fell by over 7%, and SanDisk dropped by over 7%. The U.S. storage chip index fell by 6.8%. Nvidia, on the other hand, rose by 0.71%.

Meta increased by 2.55%, Amazon rose by 0.75%, Microsoft gained 0.54%, Google A added 0.16%, Apple decreased by 0.64%, and Tesla fell by 4.02%. The energy sector rose by 3.2%, with Chevron gaining 3.6%. Defensive sectors such as healthcare, insurance, and consumer staples saw inflows, with the biotech index ETF rising by 1.50% and the energy industry ETF increasing by 2.84%. Most stocks in the S&P 500 rose, indicating that the equal-weight index outperformed the market-cap weighted index.

WTI crude oil closed up by 2.7% at $70.44 per barrel. Brent crude rose by 3% to $74.16 per barrel, having increased by over 6% at one point during the day. Spot gold fell by 1.2% to $4114.57 per ounce. Spot silver dropped by 4% to $59.51 per ounce. In the cryptocurrency market, Bitcoin fell by 1.06% to $63363.99; Ethereum dropped by 1.56% to $1771.45. The 10-year U.S. Treasury yield stood at 4.54%, with the 30-year yield surpassing 5%, reaching a new high since May 22. U.S. Treasury yields rose across the board by over 6 basis points. New York Fed inflation expectations data climbed to a three-year high.

Macro and Outlook

The incident of merchant ships being attacked in the Strait of Hormuz led the U.S. Treasury Department to announce the withdrawal of the exemption for Iranian oil sales, effective immediately, with the original exemption set to expire on August 21, prohibiting any new related transactions. Oil prices reacted swiftly, and the key question going forward is the persistence of the geopolitical conflict. If the situation calms down in a day or two, oil prices may fall back, providing a chance for tech stocks to rebound; however, if the situation escalates further, the upward trend in defensive stocks may continue into next week.

Samsung reported a 19-fold increase in second-quarter profits, setting a historical record, yet its stock price fell by 9% during the day. The market had already fully priced in this impressive expectation, and the earnings release became an opportunity for profit-taking. Investors' pricing logic is shifting from “how fast is the growth” to “how solid is the cash flow”, and this change is expected to continue suppressing the performance of chip stocks.

The Philadelphia Semiconductor Index hit a new low since mid-June, reflecting a concentrated liquidation of momentum positions in AI, chip, and storage sectors. Morgan Stanley strategists believe that funds are flowing back to sectors that have lagged this year, and structural rotations within the tech sector are key variables at present. The rise of most components in the S&P 500 indicates that this is not a systemic panic, but rather a structural adjustment.

The rise in oil prices has directly boosted inflation expectations, while U.S. Treasury yields have moved up comprehensively, with the 30-year Treasury hitting a new high since May. At the same time, the market still needs to digest the upcoming 3-year Treasury auction and the issuance of Amazon's $25 billion corporate bonds. The rise in Treasury yields is evidently putting pressure on tech stocks.

Microsoft is considering developing its own model to replace OpenAI and Anthropic products to cut costs, which has drawn market attention. Additionally, Democratic members of the U.S. Senate have questioned Nvidia, Oracle, Google, Microsoft, SpaceX, and Amazon regarding the Pentagon's AI contracts. Changes in the policy environment and adjustments in procurement strategies may influence the performance growth expectations of AI chip companies.

Tide View

The dual pressures of geopolitical conflict and profit-taking in the chip sector are sufficient to suppress a rebound in tech stocks in the short term. Samsung's earnings turnaround is particularly significant, marking a shift in market pricing logic from “growth rates” to “cash flow”, suggesting that high-valuation tech stocks will remain under pressure in the short term. The rotation into defensive and energy stocks is a natural consequence; in the context of rising oil prices and pressure on the bond market, these sectors become increasingly attractive to institutions. The breadth of the S&P 500 has improved, indicating that this round of sell-off is more about position clearing rather than panic selling.

Whether the rotation can be sustained depends on the future direction of oil prices. If the risks in the Strait of Hormuz are resolved soon, leading to a drop in oil prices and easing of inflation expectations, a rebound in tech stocks may reoccur; if the geopolitical situation continues to escalate, the leading trend of defensive stocks may continue into next week, directly challenging the prevailing logic of favoring tech stocks this month.