S&P 500 falls for third day as Dow drops 307 points

The S&P 500 fell 0.2% to 7,443.28, extending its losing streak to three sessions, as investors weighed US-Iran tensions against a busy earnings calendar.

"Relatively flat prices are the market waiting for proof," said Lauren Cassidy, chief investment officer at Founders ETF. "The market is holding its breath."

The Dow Jones Industrial Average dropped 307 points, or 0.6%, to 51,839.26, while the Nasdaq Composite edged down less than 0.1% to 25,508.07 after rising as much as 1.2% earlier in the session. The Russell 2000 fell 0.7% to 2,942.43. The Cboe Volatility Index slipped 0.12 points to 18.65, indicating traders were not pricing in panic despite the geopolitical backdrop.

The mixed close sets up a critical week for equities, with Alphabet, Tesla and Intel reporting results in the coming days and Meta, Amazon and Microsoft due the following week. A strong earnings season could reverse the S&P 500's three-day slide, while any disappointment risks deepening the selloff.

Energy was the best-performing sector in the S&P 500, rising as oil prices climbed on Middle East supply risks. Technology and communication services lagged as investors trimmed positions ahead of earnings from the mega-cap names. On the NYSE, declining stocks outnumbered advancers by a ratio of roughly 3-to-2, reflecting broad-based weakness beneath the headline index.

The selloff coincided with three catalysts: an escalation in US-Iran hostilities that pushed oil prices higher, a backup in Treasury yields and positioning ahead of earnings. WTI crude rose 0.8% to $83.14 a barrel after fresh strikes raised supply concerns, while Brent crude eased 0.3% to $88.98 on signs of possible diplomatic efforts. US gasoline prices climbed back to a national average of $4 a gallon, the highest since mid-June, adding to inflation concerns that could influence Federal Reserve policy.

The US 10-year Treasury yield climbed 4.7 basis points to 4.597%, reflecting concern that higher energy costs could feed through to consumer inflation. The dollar strengthened, with the DXY index rising 0.21% to 100.98, as safe-haven demand offset pressure from a weaker pound after Andy Burnham's ascension to UK prime minister introduced cabinet uncertainty.

Semiconductor Stocks Rebound From Last Week's Selloff

Chip stocks bounced after last week's selloff triggered by a mini "DeepSeek moment" that rattled AI-linked names. The Philadelphia Semiconductor Index recovered some ground, though the sector remains under pressure from overcrowded bets, according to analysts. The rebound helped the Nasdaq pare what had been a steeper decline.

In single-stock moves, Domino's Pizza rose after reporting second-quarter revenue of $1.19 billion that slightly beat estimates, though earnings of $4.07 per share missed forecasts. The company maintained its fiscal 2026 sales growth forecast in the low single digits, highlighting the challenging consumer environment.

Gold prices were largely flat at $4,013.20 an ounce, as safe-haven demand from the Middle East conflict was offset by a stronger dollar and higher real yields. Markets are pricing in a 62% probability of a Fed rate hike by September, according to fed funds futures, even as the central bank is expected to hold rates steady at its July meeting. The next major test for equities comes Wednesday, when Alphabet reports second-quarter results after the close.

This article is for informational purposes only and does not constitute investment advice.