After opening higher, both the S&P 500 (SPX) and the Nasdaq 100 (NDX) have since reversed their gains and fallen into negative territory.
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Profit-taking in semiconductor and memory stocks is driving the decline. SanDisk (SNDK), Micron (MU), and AMD (AMD) are all deep in the red following a recent rally. In addition, South Korean semiconductor leader SK Hynix (SKHY) is plummeting after its highly-anticipated IPO last week. The pressure comes despite a positive earnings report and guidance hike from chip equipment giant ASML (ASML).
Iran Tensions Offset Cooling Inflation
Meanwhile, renewed tensions between the U.S. and Iran have revived fears of higher oil prices and rising inflation. The U.S. has launched hundreds of strikes against targets in Iran in recent days. The attacks aim to weaken Iran’s ability to disrupt traffic through the Strait of Hormuz. In addition, the U.S. reimposed its naval blockade on Iranian ports on Tuesday evening.
On a brighter note, investors received another sign of easing inflation following Tuesday’s tame Consumer Price Index (CPI) update. In June, the Producer Price Index (PPI) fell 0.3% from May, below the estimate of 0%. The index rose 5.5% on an annual basis, also below the estimate of 6.2%.