Oil Prices Drop Near Pre-War Levels Dragging Energy Stocks, Tech Sector Under Pressure for Third Straight Day
Claire Weston
Brent crude plunged 4.3% toward pre-war prices, but the oil tailwind failed to lift equities — tech sold off for a third straight session, the S&P 500 slipped 0.1%, and capital kept rotating from tech into real-economy sectors.
Why did oil fall back to pre-war levels?
Brent crude dropped 4.3% to $73.74 a barrel, close to where it traded before the Iran war began. WTI fell 3.9% to $70.34.
The main driver: tanker traffic through the Strait of Hormuz — the world's most critical oil-shipping chokepoint — has been steadily improving, fueling expectations of a supply recovery.
This means → the war premium is draining out of oil prices, and energy stocks are weakening with it.
Oil fell — why didn't stocks rally?
In theory, falling oil eases inflation expectations and supports equities. But the sustained tech sell-off wiped out that benefit.
The S&P 500 closed down 0.1%; the Nasdaq fell 0.4%, adding to a cumulative 3.5% drop over the prior two sessions.
The Dow bucked the trend, rising 0.4%, led by consumer and industrial names. In plain terms = money is moving out of tech and into real-economy sectors — a classic sector rotation.
Why is AI getting hit so hard?
AI chip company Cerebras Systems plunged 20% after warning it expects to keep operating at a loss. This reflects a deeper market anxiety about how fast AI buildouts are burning cash.
The Philadelphia Semiconductor Index slipped 0.2%, on top of a nearly 8% drop the day before.
RSM chief economist Joseph Brusuelas said: "I'm still trying to figure out what's driving the sell-off — insufficient global demand is my first instinct." He added that investors may be questioning how much debt-funded AI construction the market can absorb.
How are other tech giants holding up?
Oracle fell 4.6%, bringing its weekly decline to 15%. Qualcomm dropped 3.3%; Microsoft shed 2.3%.
Micron dipped 0.4% during the session but rallied after hours on quarterly results and guidance that beat expectations — investors responded positively to its memory-chip outlook.
South Korean AI chip maker SK Hynix is reportedly gauging investor appetite for a $29 billion U.S. listing. This means → even with tech under pressure, leading chip companies are still hunting for new funding windows.
What happened to bonds and other assets?
Falling energy costs eased inflation fears. The 10-year Treasury yield dropped to 4.4% from 4.493%; the 2-year yield fell to 4.136% from 4.191%.
Yet the dollar kept strengthening, and expectations for further Fed rate hikes have not faded. Gold slid below $4,000 an ounce, a seven-month low; Bitcoin broke under $60,000, its lowest since 2024.
In plain terms = the drag from rate expectations has spread across multiple asset classes. Whether tech can rebuild valuation support with actual earnings during the coming reporting season is the next critical test.
Content is for reference only, not financial advice.