Monday morning was relatively calm for the stock market: the S&P 500 (-0.1%) and Dow Jones (-0.2%) slipped slightly after last week’s record rally, while the Nasdaq Composite (-0.4%) posted a somewhat larger decline amid some weakness in the technology sector. There was little corporate news this morning as the Q2 reporting season winds down, although investors continue to monitor geopolitical developments. At the same time, oil prices rose by $3.13 (+4.0%) to $81.32 per barrel after Iran put forward a number of tough demands over the weekend, including compensation for damage caused by the conflict, the unfreezing of Iranian assets, and an end to the naval blockade. These conditions appear difficult to accept and have rekindled concerns that disruptions to oil supplies through the region may persist.
Although the jump in oil prices weighed on stocks at the open, the market overall showed resilience. The health care sector (+1.2%) stands out, with Vertex Pharma shares (+7.2%) leading gains after shares of a competitor in cystic fibrosis treatment, Sionna Therapeutics (-92%), plunged following the discontinuation of development of SION-719 as an add-on to standard therapy. The drug failed to meet a key efficacy endpoint.
The financial sector (+0.3%) is also posting a modest gain, helped by a rally in Berkshire Hathaway Inc. shares (+2.1%) after the company reported a significant increase in Q2 operating profit and stepped up its share buyback program under new CEO Greg Abel.
Meanwhile, the information technology sector (-0.9%) is weighing on the major indexes. Apple shares were among the laggards after Jefferies cut its rating on the stock from “hold” to “underperform.” Following last week’s rally, profit-taking is also being seen in semiconductor stocks: the PHLX Semiconductor Index fell 2.1%.
Real estate (-1.4%) and utilities (-0.7%) are also underperforming, as Treasury yields rise along with oil prices.