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Middle East tensions lifted oil prices while AI-led tech weakness dragged broader markets lower.
Oil and shipping ETFs DBO, USO and BWET surged on escalating Strait of Hormuz tensions.
WEAT climbed on Black Sea and Australian supply concerns, while VXX rose as volatility spiked.
Wall Street delivered a downbeat performance last week. The S&P 500 Index fell 1.6%, the Dow Jones fell 0.9%, the Nasdaq Composite plunged about 2.9% and the Russell 2000 retreated 0.5% last week.
The renewed geopolitical tensions in the Middle East and the tech slump mainly led to the slump. Oil prices jumped last week, with the United States Oil Fund LP (USO - Free Report) gaining 10.7% due to the flare-up in tensions between the United States and Iran.
Hormuz Tensions Deepen
President Trump announced last week that the United States would reimpose a blockade of the Strait of Hormuz and levy a 20% fee on cargo passing through the strategic waterway, escalating tensions in the Middle East.
Vessel traffic through the Strait of Hormuz has declined since then, as escalating U.S.-Iran tensions prompt shipowners to avoid the key energy corridor. Lloyd’s List Intelligence recorded just 53 vessel transits in the week through July 20, down 66% from 157 the previous week, as quoted on CNBC.
Moreover, the U.S. military said a service member was killed after an Iranian attack in northern Iraq on Saturday, a day after an attack on a base in Jordan killed two U.S. soldiers, as quoted on BBC.
Inside the Tech Selloffs
Investors are becoming increasingly cautious about the AI trade as concerns over the sustainability of corporate spending on AI weigh on sentiment. The technology sector, particularly semiconductor stocks, has led the recent market weakness as rising concerns over AI-related capital expenditures and rich valuations dampen investor sentiment.
AI Inflation Fears Intensify
Rising expectations that AI could fuel inflation are expected to keep investors on edge. Goldman Sachs cautions that the rapid adoption of AI is likely to fuel inflation globally as supply struggles to keep pace with soaring demand for critical AI components, including memory chips and semiconductors. The United States is likely to be hit the hardest, as quoted on Business Insider.
Shares of another recent IPO hot-star, SpaceX (SPCX - Free Report) , also slumped 14% last week. On July 16, SpaceX's Starship rocket triggered a last-second abort before liftoff its 13th flight test from Texas, which wiped off about $100 billion from the company's market value, per Reuters, as quoted on Yahoo Finance.
ETF Winners
Against this backdrop, below we highlight a few winning ETFs of last week.
Oil prices rose last week as the war between the United States and Iran intensified, fueling concerns over disruptions to energy shipments through the Strait of Hormuz. President Trump announced last week that the United States would reimpose a blockade of the Strait of Hormuz and levy a 20% fee on cargo passing through the strategic waterway, escalating tensions in the Middle East.
Due to the crisis in the Strait of Hormuz, shipping routes were disrupted, driving a sharp surge in freight rates. This has strengthened the investment case for BWET. Broader disruptions across global trade lanes have supported shipping stocks this year, with elevated shipping rates in recent months positioning the fund as a clear beneficiary.
Wheat prices hit a two-year high last week as traders locked in profits. The Russia-Ukraine conflict showed no signs of easing, with Russian forces resuming strikes on Ukrainian port infrastructure along the Black Sea coast in response to recent Ukrainian attacks on Russian vessels in the Sea of Azov and the Black Sea, per Trading Economics.
Plus, the USDA reported that U.S. wheat net export sales of 235,100 metric tons for the week ended July 9 were below market expectations. Meanwhile, supply concerns emerged in Australia – one of the world’s largest wheat exporters – due to hotter and drier conditions, Trading Economics noted.
Volatility
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) – Up 5.1%
AI jitters, oil risks and inflation fears caused massive volatility last week, causing stocks to slump. The CBOE Volatility Index (VIX), which reflects market expectations of near-term volatility, jumped more than 12% last week, highlighting growing investor anxiety and expectations for heightened market volatility.
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Top-Performing ETF Areas of Last Week
Key Takeaways
Wall Street delivered a downbeat performance last week. The S&P 500 Index fell 1.6%, the Dow Jones fell 0.9%, the Nasdaq Composite plunged about 2.9% and the Russell 2000 retreated 0.5% last week.
The renewed geopolitical tensions in the Middle East and the tech slump mainly led to the slump. Oil prices jumped last week, with the United States Oil Fund LP (USO - Free Report) gaining 10.7% due to the flare-up in tensions between the United States and Iran.
Hormuz Tensions Deepen
President Trump announced last week that the United States would reimpose a blockade of the Strait of Hormuz and levy a 20% fee on cargo passing through the strategic waterway, escalating tensions in the Middle East.
The blockade began on July 14, 2026, with U.S. Central Command saying it would enforce restrictions on vessels traveling to or from Iranian ports and coastal areas (read: Leveraged Oil ETFs Likely to Surge as Hormuz Tensions Deepen).
Vessel traffic through the Strait of Hormuz has declined since then, as escalating U.S.-Iran tensions prompt shipowners to avoid the key energy corridor. Lloyd’s List Intelligence recorded just 53 vessel transits in the week through July 20, down 66% from 157 the previous week, as quoted on CNBC.
Moreover, the U.S. military said a service member was killed after an Iranian attack in northern Iraq on Saturday, a day after an attack on a base in Jordan killed two U.S. soldiers, as quoted on BBC.
Inside the Tech Selloffs
Investors are becoming increasingly cautious about the AI trade as concerns over the sustainability of corporate spending on AI weigh on sentiment. The technology sector, particularly semiconductor stocks, has led the recent market weakness as rising concerns over AI-related capital expenditures and rich valuations dampen investor sentiment.
AI Inflation Fears Intensify
Rising expectations that AI could fuel inflation are expected to keep investors on edge. Goldman Sachs cautions that the rapid adoption of AI is likely to fuel inflation globally as supply struggles to keep pace with soaring demand for critical AI components, including memory chips and semiconductors. The United States is likely to be hit the hardest, as quoted on Business Insider.
SK Hynix’s Shares Flat
SK Hynix's recent U.S. debut has sparked a wave of new leveraged ETFs likeDirexion Daily SK Hynix Bull 2X ETF (SKHL). However, SK Hynix Inc – ADR (SKHY - Free Report) shares remained flat (read: Tap SK Hynix's Memory Leadership With These New Leveraged ETFs).
SpaceX Nosedives
Shares of another recent IPO hot-star, SpaceX (SPCX - Free Report) , also slumped 14% last week. On July 16, SpaceX's Starship rocket triggered a last-second abort before liftoff its 13th flight test from Texas, which wiped off about $100 billion from the company's market value, per Reuters, as quoted on Yahoo Finance.
ETF Winners
Against this backdrop, below we highlight a few winning ETFs of last week.
Energy
Invesco DB Oil Fund (DBO - Free Report) – Up 10.9%
United States Oil Fund LP (USO - Free Report) – Up 10.7%
VanEck Oil Refiners ETF (CRAK - Free Report) – Up 7.8%
Oil prices rose last week as the war between the United States and Iran intensified, fueling concerns over disruptions to energy shipments through the Strait of Hormuz. President Trump announced last week that the United States would reimpose a blockade of the Strait of Hormuz and levy a 20% fee on cargo passing through the strategic waterway, escalating tensions in the Middle East.
Shipping
Breakwave Tanker Shipping ETF (BWET - Free Report) – Up 11.9%
Due to the crisis in the Strait of Hormuz, shipping routes were disrupted, driving a sharp surge in freight rates. This has strengthened the investment case for BWET. Broader disruptions across global trade lanes have supported shipping stocks this year, with elevated shipping rates in recent months positioning the fund as a clear beneficiary.
Wheat
Teucrium Wheat Fund (WEAT - Free Report) – Up 6.5%
Wheat prices hit a two-year high last week as traders locked in profits. The Russia-Ukraine conflict showed no signs of easing, with Russian forces resuming strikes on Ukrainian port infrastructure along the Black Sea coast in response to recent Ukrainian attacks on Russian vessels in the Sea of Azov and the Black Sea, per Trading Economics.
Plus, the USDA reported that U.S. wheat net export sales of 235,100 metric tons for the week ended July 9 were below market expectations. Meanwhile, supply concerns emerged in Australia – one of the world’s largest wheat exporters – due to hotter and drier conditions, Trading Economics noted.
Volatility
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) – Up 5.1%
AI jitters, oil risks and inflation fears caused massive volatility last week, causing stocks to slump. The CBOE Volatility Index (VIX), which reflects market expectations of near-term volatility, jumped more than 12% last week, highlighting growing investor anxiety and expectations for heightened market volatility.