Following the Juneteenth holiday, U.S. stock markets reopened Friday to a session marked by divergent results across major indexes, reflecting deep investor uncertainty. The Dow Jones Industrial Average managed to gain ground, while the S&P 500 and Nasdaq Composite experienced declines. Trading volume remained lighter than typical post-holiday sessions, suggesting some market participants extended their break amidst the prevailing caution.
A significant factor contributing to the Nasdaq's and S&P 500's weaker performance was a report from the Wall Street Journal indicating that the U.S. government is considering revoking crucial waivers that permit global chipmakers to utilize American technology in China. This news sent ripples through the semiconductor sector, with major players like Nvidia, Lam Research, Applied Materials, and Broadcom each experiencing drops of 2% to 4%.
In contrast, CarMax stood out as a notable gainer, with its stock rising after the company reported stronger-than-expected quarterly profits, providing a positive outlier in an otherwise subdued market.
Geopolitical tensions weigh on sentiment
The broader market sentiment was heavily influenced by escalating geopolitical tensions, particularly regarding the Middle East. President Donald Trump's announcement of a two-week deadline to decide on potential U.S. military involvement in the Israel-Iran conflict injected further uncertainty into global markets. This timeframe offers a slim possibility for a negotiated settlement over Iran's nuclear program, which could avert a wider regional conflict.
Brian Jacobsen, chief economist at Annex Wealth Management, commented on the situation, stating, "We're all waiting on pins and needles to see what happens with the Israel-Iran situation. These types of situations can stress markets, but often the best way to manage that stress is to just ride through it and not try to trade it."
Oil prices experienced fluctuations amidst concerns that an expanded conflict could severely disrupt global crude flows. Iran's significant role as an oil producer and its strategic position along the Strait of Hormuz, a critical chokepoint for international oil shipments, underscored the potential for widespread market disruption.
Juneteenth marks a new tradition for markets
Thursday's market closure for Juneteenth marked the fourth consecutive year that U.S. exchanges have observed this federal holiday. Established in 2021, Juneteenth commemorates June 19, 1865, when Union troops arrived in Galveston, Texas, to announce the freedom of all enslaved people. Both the New York Stock Exchange and Nasdaq, along with the bond market, suspended trading for the day, signifying the holiday's growing recognition and impact on financial calendars.
