US Stocks Fall as Dow Drops 370 Points; CSPs Lead Losses as Cloud Memory Stocks Surge Late; SanDisk and Tesla Rise Over 5%

TradingKey - Military conflict between the US and Iran escalated again, with reports that Trump may approve a resumption of strikes against Iran. Meanwhile, international oil prices and US Treasury yields both rose sharply, compounding stock market pessimism. The three major US stock indexes fell, with cloud vendors leading the decline, while memory stocks surged late in the session.

At the close, the Dow Jones Industrial Average fell 0.70% to 53,185.90; the Nasdaq Composite Index fell 0.12% to 26,370.89; and the S&P 500 Index fell 0.33% to 7,686.14.

Tech Stock Performance

Tesla (TSLA) bucked the trend to gain 5.51%, closing at $367.9.

Tesla launched a streamlined, lower-priced budget version of the Model 3 in Hong Kong and Macao, China, further lowering the entry barrier. The starting price for this version in Hong Kong is HK$205,000, an 8.5% reduction from the previous base model, and MOP252,000 in Macao.

Among mega-cap tech stocks, Tesla (TSLA) rose 5.51%, SpaceX (SPCX) gained 1.55%, Nvidia (NVDA) climbed 1.48%, and Broadcom (AVGO) advanced 0.42%. On the downside, Amazon (AMZN) fell 2.50%, Google (GOOGL) dropped 2.09%, Microsoft (MSFT) lost 1.22%, Meta Platforms (META) slipped 0.98%, and Apple (AAPL) declined 0.89%.

[Source: FutuBull]

The Philadelphia Semiconductor Index rose 0.57% to 11,535.05 points. Among its 30 constituents, 18 advanced and 12 declined.

Memory stocks surged in late trading, with SanDisk (SNDK) up 5.50%, Micron Technology (MU) up 2.77%, and SK Hynix (SKHY) up 2.20%.

Company News

OpenAI's Advertising Business Experiences Rapid Growth, Reaching $1 Billion Annualized Revenue Run Rate

OpenAI stated that its advertising business has achieved an annualized revenue run rate of $1 billion. OpenAI is touting a "diversified business model" as it prepares for a highly anticipated massive IPO. OpenAI began testing ads in the U.S. earlier this year, a move that drew ire from its chief rival Anthropic, which hit back with a Super Bowl commercial.

Nvidia Plans $3.5 Billion Investment in MediaTek to Further Expand AI Chip Ecosystem

Nvidia announced a $3.5 billion convertible bond investment in MediaTek, officially establishing a partnership to jointly build AI factories. MediaTek will incorporate Nvidia's data center interconnect technologies, such as NVLink Fusion, to accelerate its transition into the data center sector, aiming to capture a 15% share of the $80 billion market next year. Meanwhile, Nvidia will leverage the deal to deepen its ecosystem layout and solidify its core dominance in AI infrastructure.

U.S. FTC to Sue Amazon Over Advertiser Issues

The Federal Trade Commission (FTC) plans to file a lawsuit against Amazon on Monday, alleging that the e-commerce giant deceived advertisers by manipulating ad prices to reap tens of billions of dollars over seven years. Joined by attorneys general from more than 20 states, the lawsuit will be filed in federal court in Seattle. FTC officials said Amazon began altering its auction strategy in 2018 to secretly raise the minimum prices advertisers were required to pay. To drive up prices, Amazon began entering "soft floors" that were higher than the second-highest bid without disclosing the practice. Advertisers suffered billions of dollars in losses as a result, and the states may seek to recover a portion of those funds. Amazon operates the world's third-largest digital advertising platform, generating $68 billion in ad revenue in 2025. This marks the FTC's third major case against Amazon; the company settled a Prime subscription-related lawsuit for $2.5 billion last year, while another antitrust case is scheduled to go to trial next year.

Industry & Macro News

US Treasury Secretary Bessent: Cannot Change Bond Equilibrium Price, Will Push Forward Fiscal Consolidation with Vought

US Treasury Secretary Bessent stated that he is aligned with Fed Chair Warsh on bond issues, noting that the 10-year US Treasury yield has been largely flat since US President Trump took office. Bessent emphasized that he never suggested attempting to alter bond market trends, adding that the government cannot change the equilibrium price of bonds and that he will not speculate on the Fed's next moves. He stated that core inflation remains relatively moderate and that the Fed traditionally does not raise interest rates when facing a supply shock. Bessent also revealed that he has not bought any bonds yet and is working with Budget Director Vought on a fiscal consolidation plan. He noted that the US could become the world's premier bond market due to its bond buyback program, adding that hedge fund managers like to "speed up the process."

US 10-Year Treasury Yield Tops 4.75%, Hitting New High Since January 2025

The US 10-year Treasury yield surged past 4.75% today, hitting its highest level since January 2025, as rising oil prices boosted market expectations for Fed rate hikes. Yields across other maturities of US Treasuries also moved higher, with the 5-year Treasury yield reaching its highest level since early last year. Speaking in an interview with Fox News on the same day, US President Trump said the US would respond to Iranian attacks on US troops with further strikes. Monday's move extended a sell-off that has swept through US Treasuries in recent days, as investors grapple with mounting government debt concerns while assessing how aggressively the Fed may need to raise rates to curb inflation.

BofA Securities: August Economic Data Could Shift Fed's September Rate Hike Outlook

BofA Securities said in a report that market expectations for a September rate hike rose to nearly 60% following Fed Chair Kevin Warsh's speech on Friday, but the Fed's future tightening path could still depend on the upcoming August economic data. Analysts stated, "We cannot call a rate hike a done deal just yet, as a very weak August report could still change the picture. But absent a major negative surprise, the burden of a September hike rests on Warsh." The August jobs report will be released this Friday. The July jobs report fell significantly short of analysts' expectations, prompting some economists to question the underlying growth momentum of the US economy.

US Officials: Trump May Approve Resuming Strikes on Iran

According to Axios, three US officials revealed that Trump and his top aides have been considering limited strikes in the Strait of Hormuz to prevent Iran from rebuilding its radar and missile capabilities used to target ships. The plan could be approved following the weekend exchange of fire between the two sides. The plan was reportedly developed by US Central Command over the past week and backed by Defense Secretary Hegseth, but it had not received Trump's approval prior to this weekend's clashes with Iran. However, following the latest escalation, he may approve it. One US official said the rationale behind the plan is to mitigate the risk of Iranian attacks on oil tankers, US Navy ships, and Air Force aircraft. US officials noted that Central Command is concerned about Iran's efforts to rebuild its radar, air defense, and anti-ship missile capabilities in the strait to target vessels with greater precision.