Early Rally Fades as Oil Spike and Chip Selloff Pressure Stocks

Stocks began the session with solid gains following Friday’s sharp sell-off and a relatively quiet weekend on the Iran front, but the early momentum quickly faded. Rising oil prices and renewed weakness in semiconductor stocks weighed on sentiment, leaving the major averages mixed by the close.

The Nasdaq Composite declined 0.7%, pressured by tech losses, while the S&P 500 slipped 0.4% after turning lower in the afternoon. The Dow Jones Industrial Average managed to eke out a modest 0.1% gain, supported by broader market resilience. Smaller-cap indices underperformed, with the Russell 2000 falling 1.5% and the S&P MidCap 400 losing 0.8%.

The early advance appeared largely technical in nature, as markets attempted to rebound from last week’s declines. All eleven S&P 500 sectors opened higher, but that strength proved short-lived as selling pressure in technology stocks capped upside at the index level.

The information technology sector fell 1.5%, with semiconductors once again at the center of the weakness. The PHLX Semiconductor Index dropped 4.2%, dragged lower by sharp declines in names such as Micron and Coherent, both of which ranked among the session’s worst performers.

Software stocks provided a partial offset. The iShares Expanded Tech-Software Sector ETF rose 1.0%, supported by strong gains in ServiceNow and Palo Alto Networks, the latter boosted by insider buying from its CEO.

Outside of tech, the industrials sector declined 1.6%, while the energy sector slipped 0.9% despite another strong move higher in crude oil. WTI crude settled up 3.4% at $102.92 per barrel, extending its recent surge amid ongoing geopolitical uncertainty.

Geopolitical developments remained a key driver of sentiment. President Trump suggested that Iran has conceded to many elements of a proposed peace framework, though details were scarce and rhetoric remained aggressive, including threats targeting Iran’s energy infrastructure. Later reports of Israeli airstrikes on Tehran further dampened hopes for a near-term resolution, reinforcing market caution.

On the monetary policy front, comments from Jerome Powell offered some reassurance. The Federal Reserve Chair emphasized that longer-term inflation expectations remain anchored and downplayed the central bank’s ability to respond to supply-driven shocks such as energy spikes. Following his remarks, market-implied odds of a rate hike later this year dropped sharply—from above 20% to around 5%, according to CME FedWatch data.

Corporate news was relatively light, though Sysco stood out on the downside, plunging after announcing a $29.1 billion acquisition of Jetro Restaurant Depot.

Looking ahead, with the final trading day of the quarter approaching, positioning and rebalancing flows could influence near-term price action. However, the broader technical picture remains challenged, with the major indices still trading below their 200-day moving averages. As long as oil prices remain elevated and geopolitical uncertainty persists, the market is likely to remain volatile with limited upside traction.

Our FTinvest 11 model portfolio declined 0.24% to close at 949.38, continuing the recent stretch of mild downward movement. The portfolio remains below its all-time high of 1,039.51, with short-term momentum softening after the rebound seen earlier in March.

Based on the start-of-year level of 928.18, FTInvest 11 is now up approximately +2.28% year-to-date, maintaining a positive return despite ongoing consolidation. The portfolio’s disciplined, value-driven approach continues to provide stability as it navigates a more subdued market environment.