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(Bloomberg) — US stocks hovered near record highs with small losses on Monday, as investors prepare for a swath of corporate earnings this week while monitorinng efforts to reopen the Strait of Hormuz amid stalled Iran peace talks. A gauge of chip stocks sold off after a historic run.
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The S&P 500 Index was 0.2% lower as of 11:21 a.m. in New York after a four-week rally, while the Nasdaq 100 Index was down 0.4%, dragged lower by Advanced Micro Devices Inc. and Apple Inc. Brent crude rose 3% to around $109 per barrel while the Cboe Volatility Index hovered at 19.
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Wall Street’s biggest technology stocks, which have helped power the S&P 500 Index’s 10% gain this month, are set to release their financial results this week. Amazon.com Inc., Alphabet Inc., Meta Platforms Inc. and Microsoft Corp. are due to report on Wednesday followed by Apple a day later. All told, these companies represent a quarter of the S&P 500 Index’s market capitalization.
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“We’ve had eight consecutive quarters of double-digit earnings growth in the US market,” said Kristen Bitterly, head of wealth at work at Citigroup Global Markets. “If that sustains, then certainly this investment is going to be sustained, we’ll see the market climb higher.”
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Read: Big Tech’s $16 Trillion Earnings Week Is Make-Or-Break for Rally
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Semiconductor stocks however took a breather after their unprecedented run. The Philadelphia Stock Exchange Semiconductor Index, known as the SOX, fell approximately 2% Monday morning, poised to snap its record 18th-straight session of gains that were fueled by corporate earnings optimism and the resumption of the artificial intelligence trade.
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The gauge of US-listed chip stocks was dragged down by Marvell Technology Inc. after its unit Celestial AI cancelled purchase orders to Poet Technologies Inc., triggering a 40% rout in the latter. Those losses outweighed gains in chipmakers such as Micron Technology Inc. and Intel Corp., while Qualcomm Inc., reversed its earlier advance sparked by the speculation that it was working with OpenAI to develop smartphone processors.
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The latest financial results from some of US hyperscalers this week could provide more clues to the direction of their rally.
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“What we have seen is that the earnings story is simply there for the AI trade,” said Lori Calvasina, RBC head of US equity strategies, adding that she doesn’t see any residual damage coming out of the Iran war “hitting the earnings of the AI and tech trade that much” while materials, industrials, and consumer discretionary and consumer staples may be affected.
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Meanwhile, Axios reported on Sunday that Iran has given the US a new proposal to reopen the Strait of Hormuz and end the war that includes postponing nuclear negotiations. The plan also calls for extending the ceasefire. The report came after President Donald Trump canceled a planned trip to Pakistan by two of his main envoys.
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