Energy Lifted by Ceasefire End and Tentatively Found a Floor That Could Extend to Materials

The U.S.-Iran ceasefire collapsed on July 8 after renewed attacks on commercial vessels in the Strait of Hormuz. President Trump declared the truce "over," ordered fresh strikes, and revoked the sanctions waiver that had allowed Iranian oil exports to resume. Brent crude jumped from roughly $73 to above $80 over two days — recovering a large portion of the decline it had seen during the six-week ceasefire period.

Traditional energy names responded accordingly. Chevron added 3.7%, ConocoPhillips gained 3.9%, and Cheniere Energy rose 6.7% on the week. The direction is straightforward: Iranian supply is effectively offline again, the Strait of Hormuz remains a risk point, and a geopolitical risk premium is back in the price of oil.

The secondary question is whether elevated energy prices extend into the materials sector. Industrial metals — copper in particular — are supported by the same global infrastructure buildout driving energy demand. XLB, the S&P Materials ETF, is trading around $50.71 and has underperformed in 2026 relative to technology. Its MACD turned negative in early June, and it has not yet reclaimed its 50-day moving average. The connection to the energy move is plausible but has not materialized in price yet.

The macro risk from higher oil is real. Headline PCE was already running at 4.1% in May, driven largely by the energy component. If Brent holds above $80 through July, the inflation picture becomes more complicated for the Fed, which has held rates at 3.75% and shown no inclination to cut.

SOXX is trading near $561, up approximately 88% year-to-date within a 52-week range of $232 to $655. Technically, the sector is consolidating after a historic run rather than breaking down, but the chart above adds useful context to where valuations actually stand.

The price line tells one story — near all-time highs. The forward P/E line tells a more nuanced one. During the 2022 downturn, the sector bottomed with forward multiples compressed to around 14–16x. The AI-driven rally through 2023 and into early 2024 expanded those multiples aggressively, peaking near 33–34x as investors priced in a sustained earnings acceleration. What the chart shows now is that the forward P/E has since pulled back to approximately 29x — even as the price has continued to climb. That compression is not a coincidence: earnings estimates for the sector have grown faster than the price over the past 18 months, reflecting the genuine improvement in the underlying business cycle.

The modest multiple compression does provide some cushion compared to the 2024 peak. At 29x forward earnings, the sector is cheaper in relative terms than it was at the height of the 2024 AI rally. However, 29x is still well above the historical range of 14–20x that characterized the sector during non-peak periods, and it still embeds a high degree of confidence that Q2 and Q3 earnings will continue to grow into the current price. A forward P/E that has come down from 34x to 29x is less stretched — but it is not forgiving.

Semiconductor companies begin reporting Q2 results in the second half of July. The hyperscalers report first, and their capital expenditure language will set the tone. The underlying demand story — AI infrastructure, high-bandwidth memory, advanced packaging — has not changed. What has changed is that the sector is priced for that story to continue without interruption, which leaves it more exposed to guidance that suggests any pause or reassessment. Given where the forward P/E sits historically, even a modest earnings miss from one or two major names could be enough to push the multiple back toward the lower end of its recent range — and with price near the top of its 52-week band, that repricing has more room to the downside than the upside.

Clean energy has been one of the stronger-performing areas of the market in 2026, and the investment case has become more straightforward as the year has progressed, not less.

ICLN (iShares Global Clean Energy ETF) is up approximately 30% year-to-date and 81% over twelve months, trading near $19. It holds 106 positions across solar, wind, utilities, and grid infrastructure in more than 20 countries. Expense ratio: 0.39%.

TAN (Invesco Solar ETF) is up approximately 22% year-to-date and 110% over twelve months, trading near $54.95, with $536 million in inflows year-to-date. It holds 32 companies focused on the solar value chain. Expense ratio: 0.70%. TAN carries higher volatility — it remains down 20% from its 2021 peak on a five-year basis — but offers more concentrated exposure when solar specifically outperforms.

The case for both funds rests on two durable factors. First, global electricity demand is growing faster than fossil fuels and nuclear can accommodate, and solar and wind continue to be the lowest marginal cost sources of new generation capacity in most markets. Second, AI data centers are now locking in 15–20 year power purchase agreements for carbon-free power at a scale that did not exist in prior clean energy cycles, providing more stable long-term revenue visibility for the underlying companies.

The key risks: U.S. clean energy tax credit uncertainty, Chinese module pricing competition, and interest rate sensitivity — if sustained oil-driven inflation pushes the Fed toward a more hawkish posture, longer-duration infrastructure assets like solar projects would face a valuation headwind. For investors with existing energy exposure, TAN and ICLN are better understood as a complement to traditional energy holdings than a replacement, as both are responding to the same underlying dynamic of rising and uncertain global energy demand.

July CPI prints next Friday — the first inflation data to reflect the oil spike following the ceasefire collapse. Q2 earnings season begins with financials next week, followed by technology names in late July. The VIX closed at 18.57 on Friday, up 9.3% on the day. Crude oil is trading near $105 at mid-session today, its highest level since the spring conflict period.