[Chart courtesy of MarketWatch.com]

1. Moving the market

After opening higher, the S&P 500 and Nasdaq quickly reversed course as semiconductor stocks came under heavy selling pressure, overshadowing the relative calm that followed the weekend’s pause in hostilities between the U.S. and Iran.

Chipmakers led the retreat. The VanEck Semiconductor ETF (SMH) tumbled 3.7%, extending Friday’s losses. AMD and Teradyne each fell more than 7%, while Micron Technology dropped over 6%, weighing heavily on tech sentiment.

One bright spot came from the energy market. Easing tensions in the Middle East sent Brent crude futures sharply lower, with September contracts falling nearly 7% to around $90 per barrel.

Under normal circumstances, cheaper oil would provide a tailwind for stocks, but investors remained focused on broader market risks.

Meanwhile, geopolitical uncertainty is far from disappearing. Ukraine’s reported strike on an Iranian commercial vessel in the Caspian Sea added another layer of tension, prompting Tehran to denounce the incident as a “hostile and criminal act.”

Investors now face a critical week packed with potential market-moving events. Earnings reports from Amazon, Apple, Meta, and Microsoft will put the spotlight on corporate spending and the return on massive AI investments.

After Alphabet’s disappointing report last week, traders will be watching closely for signs that AI-related spending is starting to generate meaningful results.

The Federal Reserve also takes center stage on Wednesday. While most economists expect the next rate hike to come in September, markets are increasingly considering the possibility that the Fed could act sooner, adding another layer of uncertainty.

By the closing bell, even falling oil prices weren’t enough to lift the broader market. The S&P 500 and Nasdaq finished lower, while the Dow managed to hold onto a modest gain. The Mag 7 erased all their early advances, highlighting the market’s lack of conviction.

Elsewhere, bond yields moved lower, the dollar traded mostly sideways, gold rose but slipped back below the $4,100 level, and Bitcoin bounced around before finishing above Friday’s close.

For now, traders remain locked into a headline-driven market, reacting to every geopolitical development, earnings release, and Fed rumor.

With a major Fed decision and several mega-cap earnings reports just days away, will this week’s events finally provide a clear direction for the market, or simply add another layer of uncertainty?

[Chart courtesy of MarketWatch.com]

1. Moving the market

Stocks had a rough day as a combination of rising geopolitical tensions, surging oil prices, and disappointing reactions to major earnings reports sent traders heading for the exits.

The biggest catalyst was a sharp jump in crude oil after Yemen’s Iran-backed Houthi militants claimed attacks on two Saudi oil tankers in the Red Sea, reigniting fears that the Middle East conflict could broaden.

Adding fuel to the fire, President Trump threatened strikes against Iranian infrastructure, further rattling markets and pushing energy prices sharply higher.

Brent crude surged 6% to move back above $100 per barrel, while West Texas Intermediate (WTI) climbed 5% to top $91. Both benchmarks reached their highest levels since before the U.S. and Iran reached a ceasefire agreement last month.

Higher oil prices also spilled over into the bond market. Treasury yields climbed, with the 10-year yield hitting its highest level since January 2025, while a stronger dollar added another headwind for risk assets.

Earnings season did little to calm nerves. Alphabet slid 7% after raising its 2026 capital expenditure outlook to as much as $205 billion, highlighting the enormous costs associated with the AI arms race.

While the company pointed to strong AI demand, investors appeared increasingly concerned about just how much hyperscalers are spending to stay competitive.

Tesla fared even worse, tumbling more than 13% after reporting a significant second-quarter earnings miss. Investors were especially disappointed that operating expenses grew faster than revenue, raising fresh questions about profitability.

Gold was unable to attract much safe-haven interest despite the geopolitical backdrop, slipping while remaining above the psychologically important $4,000 level.

Bitcoin also joined the risk-off move, falling below $65,000 and tracking weakness in technology stocks, even as spot Bitcoin ETFs attracted more than $1 billion in inflows this week.

Meanwhile, Peter Schiff noted that the 30-year Treasury yield has climbed to 5.18%, its highest level since April 2006. Back then, U.S. national debt stood at roughly $8.35 trillion. Today, it’s approaching $39.6 trillion.

If borrowing costs continue moving higher, how sustainable does that debt burden become over the long run?

[Chart courtesy of MarketWatch.com]

1. Moving the market

The S&P 500 spent most of the session treading water as rising oil prices kept buyers cautious ahead of another packed day of corporate earnings reports.

Oil moved higher after the 11th consecutive round of U.S. strikes against Iran, with Secretary of State Marco Rubio stating that Iran is “not serious about talks.”

He also reiterated that American forces would continue protecting shipping traffic through the Strait of Hormuz, a critical artery for global energy supplies.

Traders remain focused on crude oil because sustained higher energy prices can eventually filter through to consumer goods and services, potentially complicating the Federal Reserve’s efforts to keep inflation under control.

That, in turn, has revived concerns that another rate hike could be back on the table as early as July.

Meanwhile, earnings season remains front and center. Wall Street is looking for fresh clues about AI spending, cloud-computing demand, corporate technology budgets, and management outlooks for the second half of the year.

A key question is whether the strong demand for AI infrastructure and software can continue to support the lofty valuations seen across much of the technology sector.

Geopolitical tensions in the Middle East pushed crude oil to six-week highs, while bond yields jumped as rate-hike concerns resurfaced.

The combination weighed on equities, with Small Caps taking the biggest hit as yesterday’s short-squeeze rally was completely erased. The Nasdaq also finished lower, while the Dow and S&P 500 managed to end the day essentially unchanged.

Elsewhere, the dollar traded sideways, gold climbed back above the $4,150 level intraday, and Bitcoin pulled back modestly below $66,000.

So, what’s next?

One thing seems increasingly likely: higher volatility. As highlighted by ZeroHedge, historical patterns suggest the VIX may be preparing for a notable move higher.

Whether history repeats itself remains to be seen, but with rising geopolitical tensions, renewed rate-hike fears, and earnings season in full swing, traders may want to buckle up for a bumpier ride ahead.

Will the market once again shrug off these growing concerns, or is volatility finally ready to make a sustained comeback?