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US stocks reversed early gains on Monday as a semiconductor selloff weighed on the broader market. The S&P 500 fell 0.2%, while the NASDAQ Composite lost 0.5%. Meanwhile, the Dow Jones Industrial Average gained about 258 points, or 0.5%.
Markets opened higher after the United States and Iran paused attacks over the weekend. However, the relief rally faded as investors sold chip stocks. Lower oil prices supported travel shares and reduced pressure on bond yields, but technology losses pulled the S&P 500 into negative territory.
Semiconductor shares fell across the market during Monday trading. The VanEck Semiconductor ETF dropped 3.7%, extending Friday’s losses. Advanced Micro Devices and Teradyne each fell more than 7%, while Micron Technology declined more than 6%.
The Philadelphia Semiconductor Index dropped about 4% after rising early in the session. Most companies in the index traded lower. NVIDIA also declined as investors assessed stronger Chinese competition and continued artificial intelligence investment. The sector has faced repeated selling during July after strong gains earlier in 2026.
Investor attention also shifted to spending plans at major technology companies. Ken Mahoney of Mahoney Asset Management said, “The biggest risk is the continuation of the spend.” He also warned that slower spending growth could hurt chip suppliers that depend on large data-center orders.
Oil prices fell sharply after both sides halted attacks for a third night. Brent crude dropped about 6.8% to near $90.25 a barrel. West Texas Intermediate crude fell around 6.1% to $83.83. Brent had traded above $100 days earlier as shipping risks increased.
US Ambassador to the United Nations Mike Waltz said the pause was ‘giving diplomacy some space.’ Iran denied holding direct talks with Washington. Still, Tehran confirmed discussions with Oman about maritime traffic in the Strait of Hormuz. Waltz also said more US military assets were moving into the region.
The oil decline supported airlines, cruise operators and other companies with high fuel costs. Energy shares moved lower as crude prices fell. Europe’s STOXX 600 gained about 0.9%, while retail and travel stocks rose more than 2%. Asian markets also advanced.
The Federal Reserve will announce its interest rate decision on Wednesday. Most analysts expect the central bank to keep rates unchanged. However, market pricing showed about a one-in-three chance of a rate increase at the July meeting.
Investors raised rate-hike bets after oil prices and new tariffs added pressure to the inflation outlook. Monday’s oil retreat reduced some concerns. The 10-year US Treasury yield fell about four basis points to 4.64%, while the dollar weakened against several major currencies.
Fed Chair Kevin Warsh faces a difficult policy setting. Inflation remains above the central bank’s 2% goal, while recent labour and consumer data have stayed steady. Samy Chaar of Lombard Odier said policymakers were ‘not there yet’ on another increase and linked the next move to Middle East tensions.
Amazon, Apple, Meta Platforms and Microsoft will report quarterly results this week. Their spending plans will receive close attention after Alphabet’s results raised concerns about artificial intelligence costs. Semiconductor companies rely heavily on orders from cloud and data-center operators.
About one-third of S&P 500 companies will publish results this week. Earnings are tracking a 26.5% increase from a year earlier. Strong profit growth may support stocks, though investors are also watching cash flow and capital spending.
The economic calendar includes second-quarter US gross domestic product, June inflation data, personal income and consumer spending. Weekly jobless claims, employment costs and consumer sentiment figures are also due. These reports will give markets more information on growth, prices and the next Federal Reserve decision.
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