The crude oil price climbed to $115/barrel today, marking a 69% increase in one week amid the U.S.-Iran conflict. Iran’s military forces, the IRGC, have threatened to close the critical Strait of Hormuz that connects the Persian Gulf to the Arabian Sea, driving up fuel prices globally.
American tech giants, including NVIDIA, Amazon, and Meta, are experiencing stock price declines as inflation fears have triggered sell-offs of highly valued stocks. The U.S. economy remains deeply intertwined with oil prices, with 37% of the country’s total energy sourced from oil. High oil prices have a historical correlation with trimmed consumer spending, high inflation, high Fed rates, and low growth. Hence, rate-sensitive stocks (including tech stocks) are vulnerable to oil prices regardless of their oil dependency.
Complete Energy Snapshot
Crude oil powers 90% of global transportation and 30% of world energy, which makes it the lifeblood of the economy. 35% of the global crude oil production comes from the OPEC+ countries (Middle East), and conflicts in the Middle East have historically triggered severe disruptions and recessions.
As the U.S.-Iran conflict is entering its 10th day with tensions unabated, here is the latest snapshot of oil and related energy rates:
| Commodity | Price | Daily Change | Daily % | Monthly % | Yearly % |
|---|---|---|---|---|---|
| Crude Oil | 115.708 | 24.808 | 27.29% | 80.56% | 74.90% |
| Brent | 116.490 | 23.799 | 25.68% | 68.56% | 67.39% |
| Natural Gas | 3.4597 | 0.2737 | 8.59% | 11.61% | -22.59% |
| Gasoline | 3.1724 | 0.4051 | 14.64% | 61.13% | 52.05% |
| Heating Oil | 4.3731 | 0.7507 | 20.72% | 82.24% | 100.92% |
| Coal | 137.30 | 2.05 | 1.52% | 18.62% | 32.98% |
Experts estimate that crude oil prices are likely to move higher if the conflict is dragged out further, as Asian economies that are heavily dependent on oil from the Middle East may run out of their oil reserves.
Tech Stocks Under Pressure
The Nasdaq 100 fell 377 points today as even the heavyweight stocks like NVIDIA are sliding down. NVIDIA stock lastly closed at $177.82, marking a decline of 3.01%. Other rate-sensitive companies, including Amazon and Meta, took the biggest hits. Amazon and Meta share prices dropped by 2.62% and 2.38%, respectively.
The Top 9 Nasdaq-100 weights reported are posting losses today:
| Rank | Company | Symbol | Weight | Price | Chg | % Chg |
|---|---|---|---|---|---|---|
| 1 | Nvidia | NVDA | 13.08% | 177.82 | -5.52 | -3.01% |
| 2 | Apple Inc. | AAPL | 11.44% | 257.46 | -2.83 | -1.09% |
| 3 | Microsoft | MSFT | 9.19% | 408.96 | -1.72 | -0.42% |
| 4 | Amazon | AMZN | 6.93% | 213.21 | -5.73 | -2.62% |
| 5 | Alphabet Inc. (Class A) | GOOGL | 5.65% | 298.52 | -2.36 | -0.78% |
| 6 | Alphabet Inc. (Class C) | GOOG | 5.27% | 298.30 | -2.61 | -0.87% |
| 7 | Meta Platforms | META | 4.94% | 644.86 | -15.71 | -2.38% |
| 8 | Broadcom Inc. | AVGO | 4.74% | 330.48 | -2.29 | -0.69% |
| 9 | Tesla, Inc. | TSLA | 4.51% | 396.73 | -8.82 | -2.17% |
Analysts’ Take
Analysts remain broadly bullish on NVIDIA, Amazon, and Meta despite tensions in the Middle East continuing to drive investor fear. Wall Street estimates an average target price of $862.26 for Meta with an upside of 33.71%. Consensus on Amazon predicts a similar upside (+31.55%) with a target price of $280.47. Many experts see the current dip as a good entry point for Nvidia, as the analyst consensus is 49.23% upside with a target of $265.36.
