Wall Street delivered a mixed performance at the close on Friday, July 25, with the Nasdaq Composite declining by over 0.6%, dragged down by weakness in chip stocks including Nvidia, AMD, and Intel. All three major indices posted losses for the week, as investors weighed the latest developments in the Middle East conflict.
The Dow Jones Industrial Average rose 235.37 points, or 0.46%, to settle at 51,947.02. The Nasdaq Composite dropped 161.87 points, or 0.64%, to 24,975.82. The S&P 500 edged up 3.68 points, or 0.05%, to 7,411.98.
All three major averages closed the week in negative territory. The Dow posted a weekly decline of 0.38%, marking its third consecutive week of losses. The Nasdaq fell 2.91% for the week, while the S&P 500 lost 0.61%, both notching their second straight weekly decline.
Stocks initially traded higher earlier in Friday's session, with oil prices pulling back, after media reports, citing three Pakistani sources, indicated that Pakistan is considering paving the way for new peace talks between the US and Iran. However, the sources noted that significant obstacles remain to initiating dialogue with Washington.
Earlier this week, US President Donald Trump stated that he would soon decide whether to launch a "massive attack" on Iran, following the expansion of the Middle East conflict to a new front in the Red Sea. In an interview with Axios, the president indicated that the proposed strike would be larger than any military action seen so far, adding that Iran "has not suffered enough."
"I am considering a massive attack. Bigger than anything before. I am about to make a decision. We are fully prepared for it," Trump said in the interview.
Media reports on Friday detailed that Trump is meeting with senior advisors and key cabinet members to decide on escalating US strikes against Iran.
Following the report, oil prices rebounded from their lows. Brent crude futures, which had briefly breached the $100 per barrel mark earlier this week for the first time since late May, retreated from that level. They were last trading around $96 per barrel, down 4%. US West Texas Intermediate crude futures fell 3% to trade above $89 per barrel.
Traders may be reluctant to hold positions over the weekend, as more aggressive strikes on Iran could occur during that period.
Over the past two weeks, US forces have continued to strike Iranian targets, with the Central Command completing its 13th consecutive night of airstrikes.
"The situation in the Middle East has the potential to create real economic consequences regarding the flow of hydrocarbons and the global economy's ability to absorb this issue," said Bill Nossi, chief investment officer at Bank of America Asset Management Group.
While Nossi believes US monetary policy rates will remain unchanged next week given the surge in oil prices this week, he added: "Federal Reserve Chairman Kevin Warsh has been very clear about his intention to bring US inflation back to target through policy choices, and we take him at his word."
Intel shares fell 6%, reversing earlier gains that followed the chipmaker's second-quarter earnings beat. Other chip stocks also declined, with Broadcom and Advanced Micro Devices each dropping 3%. Micron Technology fell 8%, while the VanEck Semiconductor ETF (SMH) retreated 3%.
"I think you are just seeing a lot of very large, institutional money flowing in and out of this sector every day. But when you step back and look at where strong earnings growth resides, where it exists in the current environment, and what is driving expectations for 2026 and 2027, these chip stocks are the primary beneficiaries," Nossi said.
"We just need to understand that there will be some sentiment-driven capital flows around this sector and its periphery," he continued.
The Dow Jones and S&P 500 were both on track to close the week lower, with losses of 0.6% and 0.7%, respectively. The Nasdaq's weekly decline was expected to exceed 2%.
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