Chip selloff and oil jump pressure Monday market setup

U.S. stock futures were pointing lower Monday as semiconductor shares weakened, CNBC’s Jim Cramer said, while oil prices climbed after the United States and Iran exchanged military strikes over the weekend. For everyday investors, the setup put two big market drivers in focus: chip stocks, which have led much of the AI trade, and energy prices, which can affect inflation expectations and corporate costs.

West Texas Intermediate crude, a U.S. oil benchmark, rose more than 3% to nearly $74 a barrel, according to Cramer. He said WTI had traded as high as $75 earlier in the morning before easing from its worst levels for stocks.

The pressure in chips started in Asia. Cramer said SK Hynix fell 15.4% in South Korea, while Samsung Electronics dropped 10.7%. Monday was the first trading session in Korea after SK Hynix listed American depositary receipts on the Nasdaq. ADRs are U.S.-traded securities that represent shares of a foreign company. Cramer said SK Hynix’s ADRs were down more than 10% in premarket trading, while Micron fell about 5% and Sandisk lost 6%.

Even with the selloff, Cramer pointed to Taiwan Semiconductor Manufacturing Co.’s June sales as evidence that demand for AI computing remains strong. TSMC, the world’s largest contract chipmaker, reported a 68% year-over-year revenue increase for June, according to CNBC. Cramer said TSMC is limited by capacity, and he cited the industry’s need for another dependable advanced-chip manufacturer as a reason his CNBC Investing Club owns Intel.

Big Tech remains central to the market debate

Cramer also said technology stocks continue to dominate the broader market conversation. In a Sunday column for CNBC Investing Club members, he wrote about why the group has been difficult to step away from, while saying the Club still aims to remain diversified. The Club’s monthly meeting is scheduled for Thursday at noon ET, according to CNBC.

Apple was one of the key analyst calls of the morning. Citi raised its price target on the iPhone maker to $365 from $315 and kept a buy rating, Cramer said. A price target is an analyst’s estimate of where a stock could trade over a set period. Citi analysts said recent price increases on MacBooks and iPads should help offset pressure on profit margins from higher memory costs, with limited damage to demand, according to Cramer. Apple closed at record highs late last week, CNBC reported.

Meta’s artificial intelligence infrastructure plans also drew attention. Cramer said the company’s Louisiana data-center project is now expected to be a 5-gigawatt facility costing more than $50 billion. The original plan called for a 2-gigawatt data center with a $27 billion cost. CNBC said a 5-gigawatt facility would have enough power for about 4 million homes.

Analysts move ratings on financials, health care and consumer stocks

HSBC upgraded Capital One to buy from hold, according to Cramer. The firm pointed to a 17% year-to-date stock decline tied to macroeconomic concerns and questions about the Discover integration. HSBC analysts said “caution is now more than reflected in the share price,” Cramer reported. Capital One is a CNBC Investing Club holding.

Wells Fargo upgraded Humana to buy from hold and lifted its price target to $502 from $227, Cramer said. The stock has more than doubled from its March lows. Wells Fargo analysts said moderating Medicare Advantage costs have lowered earnings risk and could support margin improvement next year, according to Cramer.

Citi also raised its Rockwell Automation price target to $555 from $500 and kept a buy rating, Cramer said. The call came in an industrials earnings preview that cited demand tied to AI and data-center construction. Cramer said the Investing Club prefers its holding Honeywell Technologies in that area.

Jefferies upgraded Deckers Outdoor to buy from hold and raised its price target to $130 from $110, according to Cramer. The firm said the Hoka and Ugg parent has “meaningful ability to deliver upside” to its guidance because of its “strong track record.” Jefferies’ new target implied nearly 23% upside, Cramer said.

This story draws on original reporting from CNBC.