Dow Surges 537 Points as Oil Plunges 4%, Nasdaq Slides 0.2% on Chip Rout Ahead of Fed Decision

Mumbai, July 28: US equities finished mostly higher on Tuesday, as a sharp decline in oil prices and robust corporate earnings propelled the Dow Jones Industrial Average to its best session in nearly four weeks, while a deepening selloff in semiconductor stocks kept the technology-heavy Nasdaq Composite under pressure. Investors navigated a complex landscape of easing geopolitical tensions, falling Treasury yields, and growing scepticism over artificial intelligence infrastructure spending, all against the backdrop of the Federal Reserve’s two-day policy meeting that commenced today. 

Dow Jones Industrial Average Jumps 1% to 52,747 on Oil Relief and Blue-Chip Strength 

The Dow Jones Industrial Average surged 537.24 points, or 1.03%, to close at 52,747.32, marking its biggest single-day gain in nearly four weeks. The blue-chip index opened at 52,492.88 and touched an intraday high of 52,901.87 before settling near session highs. The rally was broad-based, with all but a handful of the 30 constituent stocks finishing in positive territory. The index was propelled higher by strong earnings from industrial and consumer giants, with Coca-Cola surging over 5% and Sherwin-Williams advancing nearly 8% following better-than-expected quarterly results.  

Boeing also contributed meaningfully, rising approximately 4.5% despite reporting a larger-than-expected quarterly loss, as investors focused on the company’s positive free cash flow generation and steady production improvements. The Dow’s performance reflected a broader rotation into so-called “old economy” sectors that has been unfolding over recent weeks, as investors rotated away from high-flying technology names into more cyclical and value-oriented stocks. 

S&P 500 Edges Up 0.2% to 7,429 as Equal-Weighted Index Hits Record High 

The S&P 500 advanced 15.60 points, or 0.21%, to close at 7,428.78. The benchmark index opened at 7,395.55, touched an intraday low of 7,382.95, and reached a high of 7,452.09 before paring some gains. Notably, the S&P 500’s equal-weighted version, which strips out market-value biases, hit record highs, underscoring the breadth of the rally beyond the largest mega-cap names. Seven of the 11 primary S&P 500 sectors ended in positive territory. 

Consumer Staples led the advance, rising 1.58%, followed by Communication Services with a gain of 1.46%. Health Care also posted strong gains, adding 2.33%. The index’s modest overall advance reflected the countervailing forces at play: strength in defensive and cyclical sectors offset by weakness in technology and energy. The Information Technology sector declined 2%, while Industrials slipped 0.7%, making them the only two sectors in the red. Despite the headwinds from chip stocks, advancers outnumbered decliners on the S&P 500, reflecting the underlying strength in the broader market. 

Nasdaq Composite Slides 0.2% to 24,877 as Semiconductor Selloff Intensifies 

The Nasdaq Composite fell 55.17 points, or 0.22%, to close at 24,876.91. The technology-heavy index opened at 24,825.07 and dropped as low as 24,581.01 during the session — briefly pushing the Nasdaq-100 into correction territory, more than 10% below its recent peak — before recovering some losses in afternoon trading. The index has now fallen for five consecutive sessions.  

Semiconductor shares came under heavy pressure, with the PHLX Semiconductor Index (SOX) plunging 4.49% to 11,035.68. SK Hynix fell nearly 9%, Micron Technology dropped over 8%, and SanDisk tumbled more than 15%. The selloff was driven by mounting concerns over the sustainability of AI infrastructure spending, intensifying competition from Chinese chipmakers, and reports of circular financing arrangements in the AI supply chain.  

However, a rally in software stocks and strength in several Magnificent Seven mega-cap technology companies, including Apple, which briefly became the second company ever to notch a $5 trillion market capitalisation, helped the broader Nasdaq Composite recover most of its losses in afternoon action. 

Also Read: How to Invest in the US Stocks From India?

Russell 2000 Gains 0.2% to 2,954 as Small Caps Outperform Mega-Cap Tech 

The Russell 2000 Index, which tracks small-cap companies, rose 5.77 points, or 0.20%, to close at 2,953.80. The index opened at 2,946.67, touched an intraday low of 2,923.27, and reached a high of 2,955.39. Small caps continued to demonstrate resilience, reflecting the ongoing rotation away from large-cap technology names into broader segments of the market.  

The index remains up approximately 19% for the year, significantly outperforming the S&P 500’s 8.5% year-to-date gain and the Nasdaq’s 7% advance. The strength in small caps has been supported by rising earnings expectations, with consensus forecasts for Russell 2000 companies’ 2026 earnings growth climbing to 38% from about 23% at the start of the year. 

S&P 100 Rises 0.28% as Mega-Cap Tech Shows Resilience Amid Chip Rout 

The S&P 100 Index, comprising the largest US companies, advanced 10.07 points, or 0.28%, to close at 3,645.50. The index opened at 3,628.44, reached an intraday high of 3,659.11, and touched a low of 3,624.52. Despite the broader chip selloff, several mega-cap technology stocks demonstrated resilience. Apple shares set a fresh record high and briefly hit a $5 trillion market capitalisation, closing up approximately 1%. Microsoft and Alphabet also traded higher, providing support to the index. 

Dow Jones Composite, Transportation and Utility Averages Show Mixed Performance 

The Dow Jones Composite Average rose 73.99 points, or 0.44%, to close at 16,923.43, opening at 16,906.64 and reaching a high of 16,995.71. The Dow Jones Transportation Average declined 177.24 points, or 0.80%, to close at 21,889.07, reflecting weakness in freight and logistics stocks. The Dow Jones Utility Average slipped 1.57 points, or 0.14%, to 1,155.58, as higher interest rate expectations weighed on dividend-paying utility stocks. 

Philadelphia Semiconductor Index Plunges 4.5% as AI Bubble Fears Intensify 

The Philadelphia Semiconductor Index (SOX) tumbled 519.20 points, or 4.49%, to close at 11,035.68. The index opened at 11,150.04, touched an intraday low of 10,799.84, and recovered slightly towards the close.  

From its peak reached on June 22, the SOX is now down approximately 24.7%, putting it firmly in bear market territory. The selloff was driven by multiple factors: growing concerns over the sustainability of AI infrastructure spending, reports that a Chinese state-backed firm is producing chipmaking machines that could threaten ASML’s market position, and rising anxiety over circular financing arrangements in the AI supply chain.  

The VanEck Semiconductor ETF (SMH) fell more than 3%, tumbling for a fourth straight day. The iShares Semiconductor ETF (SOXX) declined nearly 5% and is now down more than 23% for the month, on track for its biggest monthly decline since 2021. 

NYSE Composite Rises 0.54% as Breadth Remains Positive 

The NYSE Composite Index advanced 130.85 points, or 0.54%, to close at 24,229.67. The index opened at 24,098.82 and reached an intraday high of 24,258.93. The broad-based advance reflected the strength in cyclical and defensive sectors, with advancers outnumbering decliners across the exchange. 

Also Read: How to Invest in S&P 500 Stocks Through Index Funds

S&P MidCap 400 and SmallCap 600 Show Resilience Amid Market Rotation 

The S&P MidCap 400 Index edged up 2.59 points, or 0.068%, to close at 3,798.37, opening at 3,795.78 and reaching a high of 3,802.71. The S&P SmallCap 600 Index rose 10.43 points, or 0.59%, to close at 1,779.60, opening at 1,770.27 and reaching a high of 1,780.91. The outperformance of small caps relative to large-cap technology names reinforced the theme of broadening market participation, as investors rotated away from the concentrated AI trade into more economically sensitive segments of the market. 

VIX Declines 2.5% to 18.21 as Market Volatility Eases Despite Chip Rout 

The CBOE Volatility Index (VIX), Wall Street’s preferred gauge of near-term market volatility, fell 0.46 points, or 2.46%, to close at 18.21. The VIX opened at 19.05, touched an intraday high of 19.52, and fell to a low of 17.88 before settling.  

Despite the sharp selloff in semiconductor stocks and the Nasdaq’s slide toward correction territory, the VIX’s decline indicated that investors were not broadly panicking, but rather rotating into different parts of the market.  

The index’s move below 19 suggested that market participants viewed the semiconductor weakness as a sector-specific issue rather than a systemic risk to the broader equity market. 

Consumer Staples and Health Care Lead as Energy and Tech Lag 

Sector performance was sharply bifurcated, reflecting the ongoing rotation away from growth and energy stocks into defensive and cyclical names. Consumer Staples emerged as the best-performing sector, rising 1.58% on the back of falling oil prices, which eased inflationary pressures and boosted consumer spending power. Health Care also posted strong gains, adding 2.33%, as investors sought defensive positioning ahead of the Fed decision and tech earnings.  

Communication Services advanced 1.46%. Information Technology was the worst-performing sector, declining 2%, weighed down by the semiconductor selloff. Energy stocks also suffered, falling 1.6%, as plunging oil prices eroded profitability expectations for exploration and production companies. Industrials declined 0.7%, while Utilities and Real Estate also finished in negative territory as rising interest rate expectations weighed on dividend-paying sectors. 

Crude Oil Plunges to Two-Week Low as US-Iran Ceasefire Hopes Rise 

Oil prices tumbled sharply for a second consecutive session as geopolitical tensions eased following a pause in hostilities between the United States and Iran. Brent crude futures fell $4.27, or 4.8%, to settle at $84.09 per barrel. West Texas Intermediate (WTI) crude dropped $3.35, or 4.1%, to settle at $79.26 per barrel. Combined, crude oil prices have fallen approximately 10% over two sessions as the market reassessed the geopolitical risk premium built into prices during the conflict. President Donald Trump confirmed that the US and Iran were engaged in diplomatic talks to end their conflict, though he warned the two sides would return to fighting if negotiations failed to yield a deal. Separately, Iran and Oman were reported to be seeking an agreement to restart shipping through the Strait of Hormuz. 

Treasury Yields Decline as Falling Oil Eases Inflation Fears 

Bond yields moved lower across the curve as falling oil prices reduced inflation expectations ahead of the Federal Reserve’s policy decision. The benchmark 10-year Treasury yield fell 3.2 basis points to 4.645%. The more policy-sensitive 2-year Treasury yield eased 1.0 basis point to 4.320%.  

The 30-year Treasury yield remained above 5%, closing at approximately 5.11%, marking its longest stretch above that level since the early days of the financial crisis in 2007. The decline in yields provided support to interest-rate-sensitive sectors, though the persistent elevation of long-term rates continued to be a source of concern for investors. 

US Dollar Eases as Markets Await Fed Decision 

The US Dollar Index (DXY), which measures the greenback against a basket of major currencies, declined 0.2% to 101.35, retreating from a one-month high reached earlier in the session. The euro rose 0.2% to $1.1393, while sterling gained 0.1% to $1.3288. Against the Japanese yen, the dollar was roughly flat on the day at ¥163.77.  

The dollar’s modest pullback reflected reduced inflation concerns following the decline in oil prices, which in turn lowered expectations for aggressive Federal Reserve tightening. 

Also Read : US Stock Market Timings

Gold and Silver Decline as Dollar Strength and Fed Uncertainty Weigh 

Gold futures fell 0.9% to settle at $4,038.70 per ounce, touching its lowest level since July 21 as a firm dollar and uncertainty ahead of the Fed decision weighed on the precious metal. Spot gold declined 1.2% to $4,026.49 per ounce. Silver tumbled nearly 3% to $56.73 per ounce. The declines in precious metals came despite lower oil prices, which typically reduce inflation hedging demand for gold, while the dollar’s retreat from one-month highs provided only limited support. 

Natural Gas Futures Slide 4% to Near Three-Month Low 

US natural gas futures fell approximately 4% to a near three-month low, pressured by record output, forecasts for cooler weather and lower demand over the next two weeks, and ample storage levels. Prices were also depressed by the roughly 4% decline in oil futures and lower gas flows to liquefied natural gas export plants. 

The July 28 trading session underscored the growing divergence between traditional industrial sectors benefiting from falling energy costs and technology names exposed to the AI spending narrative. The equal-weighted S&P 500 hitting record highs suggests broadening market participation beyond mega-cap tech. Treasury yields remain elevated, with the 30-year yield above 5%, keeping pressure on rate-sensitive sectors. The Fed’s policy decision on Wednesday and upcoming earnings from major technology companies will likely determine whether the rotation out of growth stocks continues or reverses. 

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