Oil Price Spike Overshadows Tech Rebound as Stocks Drift Lower

Stocks lost ground on Thursday as a sharp intraday rally in oil prices overshadowed an early rebound in technology shares and another generally solid round of corporate earnings. The S&P 500 slipped 0.2%, giving back an early advance while finding support near the 7,700 level. The Nasdaq Composite edged 0.1% lower, and the Dow Jones Industrial Average underperformed with a 0.9% decline. Smaller-cap stocks also retreated, with the Russell 2000 falling 0.6% and the S&P MidCap 400 losing 0.3%, both pulling back from Wednesday’s record highs.

Technology initially helped stabilize the broader market after opening under pressure. Memory-chip makers Sandisk and Western Digital both plunged at the open following their earnings reports but recovered substantially as the session progressed. Sandisk reported strong quarterly results, although its forward guidance disappointed investors, while Western Digital appeared to face profit-taking after its recent rally despite delivering a generally solid report.

The recovery in memory stocks sparked an early rebound across the semiconductor sector. The Philadelphia Semiconductor Index climbed more than 1% during the morning before surrendering most of its gains to finish just 0.3% higher. Buying was relatively broad across chipmakers, with Advanced Micro Devices recovering a portion of its post-earnings decline.

The information technology sector managed to close 0.1% higher, making it one of only three S&P 500 sectors to finish in positive territory. Software stocks, however, remained under pressure. AppLovin tumbled nearly 20% after reporting in-line earnings alongside weaker-than-expected revenue, while Datadog dropped 19% as investors reacted to slowing sequential growth. Those losses weighed on the iShares Expanded Tech-Software ETF, although Microsoft’s 2.5% gain helped offset some of the weakness within the sector.

The market’s tone shifted late in the morning after geopolitical headlines reignited concerns about global energy supplies. Reports that Houthi forces attacked a Saudi-flagged tanker in the Red Sea sent crude oil sharply higher. Reuters later reported that a draft U.S.-Iran agreement expected to be considered by Iran’s parliament would prohibit U.S.- and Israeli-linked vessels from transiting the Strait of Hormuz.

WTI crude oil futures settled $2.09 higher, or 2.8%, at $77.27 per barrel. The surge in oil prices lifted the energy sector 1.6%, making it the strongest-performing group in the S&P 500. Higher crude prices also pushed Treasury yields higher, creating a more challenging backdrop for equities during the afternoon session.

Health care edged up 0.1%, joining energy and information technology as the only sectors to finish the day in positive territory.

Communication services ranked among the weakest performers, falling 0.7%. Alphabet remained under pressure following reports that several prominent AI leaders are leaving the company. Bloomberg also reported that Alphabet is preparing a bond offering of approximately $25 billion. The Trade Desk added to the sector’s weakness ahead of its earnings release after the closing bell.

Industrials declined 0.8% as Honeywell and Axon both fell sharply following their earnings reports. Rising oil prices also weighed on airlines, trucking companies, and other transportation-related stocks.

Elsewhere, the materials sector fell 0.9% after a strong start to the week, while utilities (-0.9%) and real estate (-1.0%) continued to lag as Treasury yields moved higher.

Thursday’s session represented another pause following the market’s powerful rally earlier in the week. Investors continued rewarding companies that delivered strong earnings while holding technology stocks to increasingly demanding expectations. Attention now shifts to Friday’s July Employment Situation Report, followed by next week’s Consumer Price Index release. Inflation data will be closely watched after the Financial Times reported that Federal Reserve Chair Kevin Warsh remains open to raising interest rates at the upcoming FOMC meeting if inflation fails to show further signs of cooling.

Our FTinvest 11 model portfolio edged higher by 0.04% to close at 1,061.27, posting a virtually unchanged session after two consecutive days of modest declines. The portfolio remains comfortably above the 1,000 level and continues to trade approximately 3.2% below its all-time closing high of 1,096.33, indicating that it remains within close range of record territory despite the recent consolidation.

FTinvest 11 is now up approximately +14.33% year-to-date, maintaining a strong double-digit return in 2026. The near-flat performance suggests that selling pressure has eased, with the portfolio entering a period of stabilization following its powerful advance earlier in the summer. FTInvest 11 continues to demonstrate resilience after recovering from the June correction, while its disciplined, value-driven investment strategy remains focused on long-term capital appreciation through varying market conditions.