Nasdaq falls as oil, yields and AI selling pressure US stocks

US stocks fell broadly on Monday, with the Nasdaq down nearly 1.5% as technology and artificial intelligence-linked shares led the decline, according to CNBC’s Investing Club. The pressure came from several directions: a sell-off in South Korea that spread to US technology names, higher oil prices after US-Iran military exchanges, and a rise in Treasury yields.

CNBC’s Investing Club said weakness affected most sectors, with AI-related stocks among the hardest hit. The move extended a period of volatility in companies tied to data-centre infrastructure and semiconductor demand, a trade that has depended heavily on expectations for sustained spending by large cloud-computing groups.

Oil prices rose after the United States and Iran exchanged strikes over the weekend, CNBC’s Investing Club reported. President Donald Trump reinstated a blockade on Iran in the Strait of Hormuz and proposed a 20% toll on cargo moving through the waterway, according to the report. The Strait of Hormuz is a key route for seaborne energy shipments, so any disruption can affect crude prices and inflation expectations.

Bond yields moved higher alongside oil. The 10-year US Treasury yield climbed above 4.6%, CNBC’s Investing Club said. Higher yields can weigh on equities by lifting the rate investors use to value future earnings, a mechanism that often has a larger effect on growth stocks whose expected cash flows sit further in the future.

Fed rate expectations shift

Federal Reserve Governor Christopher Waller added to the pressure on risk assets with remarks that pointed to possible tightening if inflation worsens. “If we get another hot reading on core inflation this week, then the FOMC will need to consider tightening monetary policy in the near term,” Waller said in a speech to the New York Association for Business Economics, according to CNBC’s Investing Club.

The Federal Open Market Committee is the Fed body that sets interest-rate policy. Market pricing has shifted quickly: the CME FedWatch tool showed the probability of a rate increase at the Fed’s July 29 meeting at close to even odds, compared with about 25% one week earlier and 8% one month earlier, CNBC’s Investing Club reported.

The next inflation reading is due Tuesday morning, when the June consumer price index is scheduled for release. Economists surveyed by FactSet expect consumer prices to rise 3.8% from a year earlier and to decline 0.1% from the prior month, according to CNBC’s Investing Club. A stronger report could support the case for further Fed tightening, consistent with Waller’s comments.

AI spending guidance comes into focus

CNBC’s Investing Club identified earnings season, and specifically capital expenditure guidance from Alphabet, Amazon, Microsoft and Meta Platforms, as a key test for the AI trade. If those companies raise spending plans for this year and continue to signal investment growth into 2027, the report said it could support confidence in the AI infrastructure cycle. A shift toward tighter capital discipline would make that trade more difficult, according to the Investing Club.

Corning remained a focus within the AI infrastructure group. Citi raised its price target on the shares to $240 from $225, CNBC’s Investing Club reported, citing analysts who said they remained constructive because of demand for optical connectivity linked to AI data centres. Citi also cited opportunities in advanced glass packaging substrates for next-generation semiconductor applications and a solar components business that is ramping and could support earnings, according to the report.

Corning shares have retreated about 30% in July after briefly trading above $260 in June, CNBC’s Investing Club said. The stock has fallen back to around the level reached after the company announced a multi-year partnership with Nvidia, according to the report.

No major earnings were scheduled after Monday’s close. Tuesday brings results from major banks before the opening bell, including Goldman Sachs, Wells Fargo, JPMorgan, Citigroup and Bank of America, CNBC’s Investing Club reported.

This story draws on original reporting from CNBC.