At midday, the S&P 500 (^GSPC 0.66%) had fallen 0.57% to 7,566.40 after Monday’s record close. The Nasdaq Composite (^IXIC 1.03%) slipped 0.84% to 26,866.56, and the Dow Jones Industrial Average (^DJI 0.85%) dropped 0.85% to 50,873.86 as oil gains and geopolitical jitters weighed on stocks.
Market movers
Marvell Technology extended its extraordinary rally, while other artificial intelligence (AI) names such as Nvidia and Micron Technology slipped. Navitas Semiconductor surged over 20% on further Nvidia chip collaboration news.
Valuation jitters pressured Oracle and International Business Machines. Oracle’s earnings are due next week, and investors will be weighing its AI spending against income generation.
What this means for investors
Rising tensions in the Middle East pushed oil prices higher this morning, pressuring stocks. U.S. 10 Year Treasury yields increased slightly, and WTI crude gained 2.5% to $96.05. There’s growing concern about a prolonged disruption to the oil supply as the International Energy Agency warns the effective closure of the Strait of Hormuz could push global inventories to critical levels. That could trigger a severe stock market pullback.
Another potential headwind for stock markets is the growing possibility that the Federal Reserve will raise interest rates this year. With inflation running at 3.8% in April, this week’s positive jobs data makes that more likely. Higher rates make borrowing more expensive and can weigh on stocks.
While it is important not to ignore the risks, be aware that panic selling in these volatile markets can cause investors to miss rebound rallies. A diversified portfolio and long-term focus can help manage uncertain times.
Emma Newbery has positions in Nvidia. The Motley Fool has positions in and recommends International Business Machines, Marvell Technology, Micron Technology, Nvidia, and Oracle. The Motley Fool has a disclosure policy.
