NEW YORK — U.S. stocks closed lower on Tuesday, July 7, after the U.S. Treasury Department revoked the license that had allowed Iran to sell oil on the world market, sending crude prices sharply higher and adding fresh pressure to a market already struggling with a broad selloff in semiconductor stocks.

The Dow Jones Industrial Average fell 130.76 points, or 0.25%, to 52,925.15, surrendering gains after reaching another all-time intraday high earlier in the session. The S&P 500 lost 0.45% to finish at 7,503.85, while the Nasdaq Composite dropped 1.16% to 25,818.69, weighed down by another steep decline in chipmakers.

Technology once again led the market lower.

Micron Technology fell 4.7%, while KLA Corp., Marvell Technology, Broadcom and Advanced Micro Devices also posted notable losses. The VanEck Semiconductor ETF, a closely watched benchmark for the industry, dropped more than 3%, extending a retreat that has accelerated over the past week.

The weakness came despite Samsung Electronics reporting record quarterly operating profit earlier in the day. Under normal circumstances, strong results from one of the world’s largest memory-chip manufacturers would have lifted sentiment across the sector. Instead, investors continued rotating out of the semiconductor companies that have fueled Wall Street’s artificial intelligence rally throughout much of the year.

Mike Bailey, director of research at FBB Capital Partners, said expectations for many AI-related companies have climbed so rapidly that even strong earnings are no longer enough to satisfy investors. As valuations have expanded, markets have become increasingly sensitive to any sign that growth may be slowing.

Energy markets added another layer of pressure.

Oil prices surged after the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) revoked the general license that had permitted Iranian oil exports. The move followed a series of attacks on commercial vessels near the Strait of Hormuz, one of the world’s most important energy shipping lanes.

Brent crude rose more than 5% to above $76 per barrel, while West Texas Intermediate (WTI) climbed more than 5% to above $72 per barrel. Higher oil prices boosted energy shares but raised fresh concerns that rising fuel costs could eventually reignite inflation and weigh on consumers and businesses.

There were several notable company-specific moves.

Crinetics Pharmaceuticals surged 98.8% after Vertex Pharmaceuticals agreed to acquire the biotechnology company in a deal valued at approximately $10 billion. Vertex shares slipped about 2% following the announcement as investors weighed the cost of the acquisition.

Meanwhile, SpaceX, which made its public market debut on June 12, fell nearly 7% during its first trading session as a member of the Nasdaq-100 Index, a difficult start for one of the market’s newest high-profile technology stocks.

Despite Tuesday’s decline, market strategists noted that the selling remains concentrated in the companies that led the market’s gains for much of the past year. Rather than a broad-based exit from equities, investors have increasingly shifted capital into sectors such as healthcare, financials, insurance and other areas that had previously lagged the technology rally.

That rotation will be closely watched in the weeks ahead. If money continues flowing into other sectors, it could help support the broader market even as technology stocks undergo a correction. If selling spreads beyond semiconductors, however, broader market volatility could increase.

The other major variable remains oil.

As long as tensions involving Iran continue to push crude prices higher, the effects are likely to ripple well beyond Wall Street. Higher energy costs eventually feed into transportation, manufacturing, shipping and consumer prices, creating additional challenges for businesses already navigating an uncertain economic environment.

Tuesday’s trading reflected those competing forces. Investors continued taking profits in high-flying technology names while weighing the economic impact of rising geopolitical tensions and higher oil prices. Whether the current market rotation proves temporary or marks the beginning of a more sustained shift away from technology will likely depend on corporate earnings, inflation trends and developments in the Middle East over the coming weeks.

JBizNews Desk | New York

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