US stock index futures were lower across the board on Monday, with the chip sector following its global peers sharply lower in premarket trading; traders assessed the latest Middle East developments while preparing for a busy week of corporate earnings reports.
Futures for the Dow Jones Industrial Average edged up 9 points, or 0.02%, while S&P 500 futures fell 0.31% and Nasdaq 100 futures dropped 1.07%.
The semiconductor segment faced significant pressure ahead of the open. South Korean memory chipmaker SK hynix (SKHY), which surged 13% on its Nasdaq debut last Friday, saw its US-listed ADRs plunge 10.4% in premarket action, after its South Korea-listed shares plummeted over 15% in a single day.
Other chip stocks also weakened in premarket trading: Micron Technology (MU) fell 6.16%, SanDisk dropped 7.09%, and Seagate Technology PLC (STX) declined 5.53%. Advanced Micro Devices (AMD) was down 2.7%, and Intel (INTC) lost 2.8%.
Over the weekend, the US and Iran again exchanged airstrikes: Iran targeted US military facilities in several Gulf countries and announced a blockade of the Strait of Hormuz. However, President Trump denied this claim on Sunday, stating the critical waterway remained normally open to commercial vessels.
This followed an attack on a merchant ship in the strait, after which Trump ordered US airstrikes against Iran on Saturday.
The escalation in geopolitical conflict drove international crude oil prices higher in early trading: Brent crude futures rose 2.8% to $78.17 per barrel, while West Texas Intermediate crude futures gained over 2.7% to $73.32 per barrel.
Ben Emons, founder of Fed Watch Advisors, stated, "Concerns over a Strait of Hormuz blockade will continue to weigh on markets, with overall risk aversion heating up. But unless there is a tangible risk of the strait being blocked in the coming months, triggering a massive global energy shortage... the market's focus this week will be on US CPI data, [Fed Governor] Waller's speech, and bank earnings."
A total of 28 S&P 500 component companies are scheduled to report earnings this week, including major US banks such as JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and Wells Fargo. Netflix, Johnson & Johnson, and UnitedHealth Group are also set to release quarterly results.
Market expectations for this earnings season are optimistic. Refinitiv FactSet data shows analysts on average forecast second-quarter net profit growth for S&P 500 companies to exceed 23% year-over-year.
Larry Adam, Chief Investment Officer at Raymond James, noted that the technology sector is a key focus, with the market's core attention on whether artificial intelligence can continue to drive industry profits.
"Despite market concerns that hyperscale cloud providers may slow AI-related capital expenditures, we judge that corporate capital expenditure plans will maintain an upward trajectory through 2028. The core logic is that the implementation of AI across various industries is already demonstrating tangible revenue benefits; the frequency of mentions of AI in earnings calls across all 11 major sectors has surged 98% year-over-year, hitting a record high," Adam stated in a research note to clients.
US CPI inflation data for June is scheduled for release on Tuesday morning.
European stock markets closed lower across the board in early trading Monday, with Middle East geopolitical risks weighing on most sectors; the pan-European Stoxx 600 index fell 0.22%, with most regional industries and major exchange indices declining. The oil and gas sector bucked the trend to lead gains, while European semiconductor stocks followed their Asian counterparts lower.
Asian markets closed mostly lower on Monday: the sharp drop in SK hynix dragged South Korea's KOSPI index down nearly 9%; Japan's Nikkei 225 index fell 1.92%; and China's CSI 300 index declined 1.79%.
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