S&P 500 Rises as Oil Drop Outweighs Chip Selloff: Markets Wrap
(Bloomberg) — A rotation that has seen investors bail from high-profile chipmakers in favor of more economically sensitive industries picked up speed, with stocks rising on strong earnings and a drop in oil prices.
The S&P 500’s equal-weighted version — which strips out market-value biases — hit record highs. The Dow Jones Industrial Average added 1.1%. Those gains outweighed a chip rout that had earlier driven the Nasdaq 100 toward a technical correction. Brent crude settled around $84, easing inflation worries and sending bond yields down before the Federal Reserve decision.
Strong profit growth and undemanding valuations are among the reasons keeping riskier assets resilient, according to Max Kettner at HSBC Holdings Plc.
“There is good reason for the strength,” he noted, citing a solid start to the earnings season, a rebound in US economic forecasts, lower equity valuations and other positive catalysts.
Such resilience has tempered concerns about the sustainability of the artificial-intelligence spending boom, with chipmakers heading toward their worst month since 2008. Following the group’s best-ever quarter, skepticism has grown over whether the vast sums being poured into AI will justify lofty valuations.
“We maintain a constructive outlook on semis amid robust AI demand, but we believe the recent divergence in sector performance is in line with our view that there are more ways to participate in potential market gains than through a narrow set of AI-linked stocks,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.
The slide underscores how quickly sentiment has turned on one of the market’s most-crowded trades. It also makes for a tough setup heading into earnings from a slew of megacaps. Microsoft Corp. and Meta Platforms Inc. are due to report results Wednesday, followed by Apple Inc. and Amazon.com Inc.’s figures on Thursday.
While equities bounced, the contour of Tuesday’s moves was taking a serious toll on certain strategies used by quantitative traders. Simultaneous selloffs in chipmakers and rallies in defensive shares sent Dow Jones US Thematic Market Neutral Momentum Index — which goes long recent winners and shorts their counterparts — to its biggest drop since February.
Elsewhere, Treasuries rose for a third straight day, buoyed by a sharp retreat in oil prices as tensions in the Middle East eased. Swap traders continued to dial back wagers on Fed hikes this year, with a rate increase now only fully priced in by October.
“The oil impact of the conflict on headline energy inflation is straightforward and supports the view that the consumer price index may have peaked in May if oil prices do not break to new highs,” said Angelo Kourkafas at Edward Jones. “The soft consumer and producer inflation readings in June buy the Fed some time to assess how energy disruptions and inflation evolve over the summer.”
Corporate Highlights:
Nvidia Corp. Chief Executive Officer Jensen Huang defended open-weight artificial intelligence systems as crucial to developing the nascent AI industry, as officials in Washington consider how to respond to a surprise breakthrough from Chinese startup Moonshot. Meta Platforms Inc. and BlackRock Inc. plan to build a 1-gigawatt data center complex in Texas that will cost about $14 billion to develop, adding to a wave of investment in the computing hubs that power AI. Boeing Co. generated better-than-expected cash flow in the second quarter on continued strong demand for its aircraft, extending the US manufacturer’s turnaround efforts after years of crises. Coca-Cola Co. raised its full-year outlook, bolstered by demand last quarter while it served as a major sponsor of the FIFA World Cup. United Parcel Service Inc.’s outlook for volume and profit margins underwhelmed investors looking for stronger signs of improvement as the courier unwinds its relationship with Amazon.com Inc. “The continued fall in AI-related share prices suggests the AI rally is running out of road. Still, until we see existing hyperscalers like Amazon or Microsoft pull back on capex plans, momentum can shift positive, especially on a curve-flattening surprise rate hike.”
—Edward Harrison, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.3% as of 3:15 p.m. New York time The Nasdaq 100 fell 0.7% The Dow Jones Industrial Average rose 1.1% The MSCI World Index rose 0.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.2% to $1.1388 The British pound was little changed at $1.3291 The Japanese yen was little changed at 163.85 per dollar Cryptocurrencies
Bitcoin fell 1.9% to $63,687.74 Ether fell 1.7% to $1,911.7 Bonds
The yield on 10-year Treasuries declined five basis points to 4.60% Germany’s 10-year yield declined three basis points to 3.10% Britain’s 10-year yield declined five basis points to 4.94% Commodities
West Texas Intermediate crude fell 4.2% to $79.10 a barrel Spot gold fell 1.3% to $4,024.40 an ounce ©2026 Bloomberg L.P.
