On July 10, 2023, major U.S. stock indexes fell sharply: the S&P 500 Index is down 0.33%, the Dow Jones Industrial Average decreased by 0.16%, and the Nasdaq 100 Index dropped 1.12%. This decline follows a significant sell-off in South Korean chipmakers, with the Kospi Index down over 8%, as SK Hynix and Samsung Electronics each fell more than 10% amid concerns about the AI boom being overstretched.
Market sentiment was further affected by escalating tensions in the Middle East, as WTI crude oil prices surged over 4% following U.S. missile strikes against Iranian targets. In retaliation, Iran conducted drone and missile strikes in the region. The U.S. is reinstating an Iranian blockade, stating it would charge 20% on shipments for protection in the Strait of Hormuz. Additionally, earnings forecasts indicate a potential 23% increase in Q2 earnings, bolstered by AI spending contributing significantly to growth.
Internationally, Europe’s Euro Stoxx 50 fell 0.10%, while China’s Shanghai Composite plummeted 2.06%, and Japan’s Nikkei-225 dropped 1.92%. The market is pricing in a 39% likelihood of a 25 basis-point rate hike at the upcoming FOMC meeting.
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