Oil Spikes 5.1% and Chips Slump: Markets Brace for Non-Farm Payrolls Amid Iran Tensions

Woofun AI reports that U.S. equity markets retreated as crude oil prices strengthened, driven by escalating geopolitical tensions and disappointing earnings from memory chip manufacturers like Western Digital, while investor attention pivoted sharply toward the upcoming non-farm payroll data release.

The resurgence of geopolitical risk has reignited inflationary pressures, causing Brent crude oil to surge to $83 per barrel and shattering the previous downward trend fueled by optimistic expectations surrounding U.S.-Iran negotiations. This spike in energy costs has bolstered market expectations for a Federal Reserve rate hike later this year, leading to a broad-based rise in Treasury bond yields and a stronger dollar. Consequently, all three major U.S. stock indexes declined, with the S&P 500 posting a second consecutive day of losses and the Dow Jones Index leading the decline with a drop exceeding 0.8%.

Wallstreetcn reported that new details have emerged regarding a proposed navigation agreement between Iran and Oman for the Strait of Hormuz, revealing Iran’s intent to exert greater control over the waterway. According to Iranian news agency FARS on August 6, Iran’s parliament is currently reviewing the agreement, which would ban U.S. and Israeli ships from passing through the Strait of Hormuz and prohibit nations that "have caused harm to Iran" from using it for navigation. Following these reports, concerns about global energy transportation risks surged rapidly.

By the end of Thursday’s trading session in U.S. stocks, international crude oil futures saw a significant increase. Another report stated that the Iranian navy had attacked "hostile targets" at the entrance to the strait. Around 9:40 p.m. local time on August 6, two explosions were heard on Iran’s Kish Island. Iran claimed that the explosions were caused by strikes on enemy targets near the entrance to the Strait of Hormuz, and results of the operation would be made public within a few hours.

U.S. WTI crude oil briefly exceeded $78 per barrel, rising nearly 4% on the day, while Brent crude oil approached $83 per barrel, rising over 4% as well. After the reports of Iranian attacks on enemy targets, international crude oil prices continued to rise, hitting new daily highs. Brent crude approached $83.50, up nearly 5.1% from Wednesday’s close, returning above its 50-day moving average. U.S. crude oil exceeded $78.30, up over 4.1% from Wednesday’s close. According to Goldman Sachs’ energy research team, $80 per barrel is a reasonable fair value range for Brent crude, and they expect oil prices to remain between $80 and $90 per barrel until a new U.S.-Iran agreement is finalized or the situation escalates significantly.

All three major U.S. stock indexes declined slightly, with the S&P 500 falling 0.18%, the Nasdaq falling 0.06%, and the Dow Jones Index falling 0.83%.

In addition to macroeconomic pressures, downward revisions to earnings expectations at the micro level further weighed on market sentiment. Memory chip stocks suffered heavy losses as SanDisk and Western Digital disappointed investors with their guidance. Western Digital dropped over 13%, SanDisk fell 6.8%, and SK Hynix declined by about 5%. Marketing platform AppLovin dropped sharply because its quarterly revenue fell short of Wall Street expectations. Cloud security company Datadog also plummeted 19% after its forecast for third-quarter revenue growth slowed down.

However, overall during this earnings season, 84.8% of the 382 companies in the S&P 500 that reported results exceeded analysts’ expectations, far higher than the 68% historical average since 1994.

Woofun AI data shows that regarding the much-talked-about SpaceX, its stock price erased earlier losses and ended the day on an upward note after its lockup expiry. Wallstreetcn noted that with 911.5 million shares of SpaceX’s restricted stock expiring, the stock price rose 6.14% on that day, with trading volume reaching 250 million shares, the highest in over a month and a half. Stock prices of leading AI companies showed mixed trends, with only the AI-related index in the S&P 500 falling on that day. The slight gains of the tech giants masked the broader weakness in the market today.

It is worth noting that there was clear divergence in market activity during trading: hedge funds turned to buying tech stocks on that day, while long-term funds significantly reduced their holdings in information technology and healthcare sectors. Data from Goldman Sachs’ trading desk showed that overall activity was only 4 out of 10, with total trading volume 12% below the 5-day average, indicating that the market preferred to wait before Friday’s nonfarm data. Volatility also suggested that the market was bracing for potential chaos the next day.

In addition to rising oil prices, Google announced the issuance of $25 billion in bonds. The attractive yields attracted one of the largest orders for AI-related bonds this year, further increasing supply pressure on the Treasury bond market and pushing Treasury bond yields up by 5 to 7 basis points in a single day. Nevertheless, the 10-year yield remained low throughout the week. The interest rate futures market’s pricing on a Fed rate hike increased, raising the likelihood of a rate hike this year.

Vail Hartman of BMO Capital Markets said that recent data continues to reflect the resilience of the labor market, further reinforcing the market expectation that inflation will drive the Fed’s decision in September. Uncertainty surrounding the Fed’s policy framework also kept markets on edge. Fed Chair Warsh is expected to clarify the policy rationale behind reducing forward guidance at the Jackson Hole meeting later this month. Molly Brooks, U.S.

interest rate strategist at BMO Capital Markets, said: "The Fed may indeed need to carry out actual rate hikes to prove the credibility of its anti-inflation stance." Michael Ball, macro strategist at Bloomberg, pointed out that recent policy signals are relatively clear: interest rates remain the main tool, and the September meeting will still be a "critical meeting"; balance sheet adjustments are a longer-term issue.

Initial claims for unemployment benefits in the U.S. rose slightly last week but remained below 200,000 for the third consecutive week. Another report showed that labor productivity growth in the second quarter was faster than expected, indicating that companies are actively trying to offset rising costs. The July nonfarm employment report will be released on Friday. The market expects 80,000 new jobs added in that month, higher than the 57,000 expected in June, and this figure will directly influence pricing of the Fed’s policy path. Clark Bellin of Bellwether Wealth said: "Given the substantial gains in the stock market since last week, Friday’s employment report is even more important for the market.

For the market to continue rising, it needs data that is neither too hot nor too cold." Bellin also noted that the labor market remains resilient despite the dual pressures of high interest rates and improved AI productivity, with many companies choosing to retain their current workforce even as AI applications are gradually implemented. Ulrike Hoffmann-Burchardi of UBS’s Chief Investment Office warned: "Risks still exist, especially if U.S. data remains strong, oil prices continue to fuel inflation concerns, or the market continues to price in a more hawkish Fed rate hike path."

The dollar rebounded thanks to rising yields. The Japanese yen continued to decline, returning above $158 per dollar, gradually diminishing the impact of intervention efforts. Gold briefly broke through $4,300 per ounce but then declined, ending the day at the same level as the previous day. Driven by a week of capital inflows into U.S. spot Bitcoin ETFs, Bitcoin tested the $65,000 level several times but failed to break through it on this day. On Thursday, all three major U.S. stock indexes closed lower, with the Dow Jones Index falling 0.85%, the S&P 500 Index falling 0.18%, and the Nasdaq Index falling 0.06%. Memory chip stocks suffered heavy losses, with Western Digital dropping over 13%. The MSCI U.S. Tech Giants Index rose 0.23%, while Microsoft rose over 2%.

The S&P 500 Index closed down 13.59 points, or 0.18%, at 7,709.96. The Dow Jones Industrial Average closed down 464.02 points, or 0.85%, at 53,885.10. The Nasdaq Index closed down 15.087 points, or 0.06%, at 26,348.352. The Nasdaq 100 Index closed down 114.457 points, or 0.39%, at 29,373.334. The Russell 2000 Index closed down 0.58%, at 3,001.547. The VIX, or Panic Index, closed down 4.24%, at 15.14. It rose slightly after European markets opened and stayed around 16 before continuing to fall. U.

S. sector ETFs generally declined, with the Global Airlines ETF falling 2.65%, and the Internet Stocks ETF, Banking ETF, and Regional Banks ETF all falling by up to 1.36%. The Global Technology Stocks ETF fell 0.41%, and the Technology Sector ETF fell 0.31%. The MSCI U.S. Tech Giants Index rose 0.23%. Microsoft rose 2.54%, Apple rose 0.45%, Meta rose 0.19%, NVIDIA fell 0.10%, Amazon fell 0.14%, Tesla fell 0.63%, and Google A shares fell 1.29%. The Philadelphia Semiconductor Index rose 39.81 points, or 0.

33%, to 12,048.693. TSMC ADR rose 0.98%, and AMD rose 1.50%. The Nasdaq China Golden Dragon Index rose 0.27%, to 6,570.30, closing higher despite an initial decline. Among popular Chinese concept stocks, Zai Lab rose 13.7%, Jinko Solar rose 2.8%, GCL-Poly raised 2.2%, NetEase rose 1.7%, ASE Group rose 1.4%, Trina Solar rose 0.6%, Tencent fell 1.3%, and Alibaba fell 1.4%. Circle Internet Group fell slightly by 0.01%. The Euro Stoxx 600 Index continued to hit new all-time highs, showing an "N-shaped" trend during trading.

The Italian stock market also reached new all-time highs. The Euro Stoxx 600 Index rose 0.16%, to 658.19. The Eurozone Stoxx 50 Index rose 0.39%, to 6,502.56, hitting another new all-time high after one trading day. The German DAX 30 Index rose 0.05%, to 26,140.13. The French CAC 40 Index rose 0.35%, to 8,699.71, hitting new all-time highs for the third consecutive day. The UK FTSE 100 Index fell 0.19%, to 10,867.89. Among Eurozone blue-chip stocks, Deutsche Telekom rose 6.31%, Hermès rose 5.

17%, and ASML Holding rose 1.92%, ranking third. Airbus fell 1.16%, ranking fourth in terms of decline, while Royal Ahlambra Group fell 1.36%. Among all components of the Euro Stoxx 600 Index, WPP rose 28.62%, SBM Offshore rose 11.93%, and Hikma Pharmaceutical rose 8.15%, ranking third. Deutsche Telekom had the sixth-largest gain. This marks a period of heightened volatility as markets navigate conflicting signals from geopolitical instability and resilient labor data.