Markets traded fearful on July 16, with chip stocks leading a broad selloff over AI spending worries while the US-Iran conflict kept oil elevated. Volatility spiked to its highest level in weeks. Here's what moved, and what it means heading into the Fed's July 29 meeting.
Why did the VIX jump to 16.73?
The VIX closed at 16.73 on July 16, up 6.76% from Wednesday's 15.67 and its highest level in weeks. The move tracked a broad equity selloff led by chip stocks, after Taiwan Semiconductor's record quarter came with a sharply higher capital spending plan that unsettled investors. The S&P 500 fell 0.5% and the Nasdaq dropped 1.5% on the day.
What's driving the equity selloff?
Chip stocks led the market lower. Oracle fell roughly 6% on concern that its AI infrastructure spending, guided toward $70 billion by 2027, may outrun near-term returns. Abbott Laboratories jumped almost 11% after raising full-year adjusted EPS guidance to $5.45-$5.60, and Cintas gained 6.5% on a Bank of America upgrade following strong fiscal fourth-quarter results. The Roundhill Memory ETF traded lower alongside the broader memory-chip selloff.
What are yields and currencies doing?
The 10-year Treasury yield closed at 4.57% on July 16, little changed as softer producer inflation offset lingering rate uncertainty. EUR/USD traded near 1.1467 and USD/JPY pulled back toward 162.4 after Japanese officials repeated warnings about possible currency intervention. Futures markets still lean toward the Fed holding its current 3.50%-3.75% range at the July 29 meeting, though hike odds have crept higher alongside oil-driven inflation risk from the Iran conflict.
What's happening in commodities and crypto?
Oil held near one-month highs around $80 a barrel after Iran's Revolutionary Guard closed the Strait of Hormuz again, a chokepoint for close to a fifth of global crude flows. Gold showed modest strength as haven demand offset a steadier dollar. Crypto stayed in Fear territory, with the Fear and Greed Index near 26. Bitcoin held near $63,000, and network-wide liquidations topped $320 million over 24 hours, most of it long positions unwinding as prices fell.
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