Dow rises as S&P 500 edges higher, chip stocks remain under pressure

• Semiconductor stocks extended losses with AMD down 5%, Teradyne down 4%, and the SMH ETF declining, though the sector remains up 63% in 2026 despite falling 20% from late June highs.
• Oil prices plunged sharply with Brent crude down 8.7% to $88.36 and WTI down 7.5% to $82.61 after the U.S. paused military action against Iran and announced talks with Tehran.
• Markets await the Fed's Wednesday decision (62% probability of holding rates steady) and Big Tech earnings from Microsoft, Amazon, Meta, and Apple, with S&P 500 Q2 earnings expected to grow 39% year-over-year.

Market Summary: Dow Rises Amid Chip Weakness and Fed Decision Anticipation

Market Performance:

The Dow Jones Industrial Average gained 262.83 points (+0.51%) to close at 52,210.08, while the S&P 500 edged up marginally (+0.02%) to 7,413.18. The Nasdaq Composite declined 0.18% to 24,932.08, pressured by semiconductor weakness.

Semiconductor Sector Under Pressure:

Chip stocks extended losses despite recovering from session lows. The VanEck Semiconductor ETF (SMH) fell, with Advanced Micro Devices down 5%, Teradyne -4%, and Micron -2%. ASML dropped 6% as China's development of domestic deep ultraviolet (DUV) lithography machines raised competitive concerns for U.S. chipmakers. Despite the selloff, the Philadelphia Semiconductor Index remains up 63% in 2026, though down 20% from its late June peak.

Oil Market Decline:

Oil prices tumbled sharply after the U.S. paused military operations against Iran and announced diplomatic talks. Brent crude fell 8.7% to $88.36/barrel, while WTI dropped 7.5% to $82.61—both hitting week-plus lows. Energy stocks including Occidental Petroleum and Exxon Mobil declined.

Key Events Ahead:

Investors await critical catalysts this week: the Federal Reserve's policy decision Wednesday (62% probability of unchanged rates per CME FedWatch Tool), June PCE inflation data Thursday, and major tech earnings from Microsoft, Amazon, Meta, and Apple. S&P 500 companies are expected to report 39% aggregate Q2 earnings growth year-over-year, with AI-related firms accounting for significant contributions.

Market Rotation:

Defensive sectors including consumer staples and healthcare outperformed as investors reassessed AI investments following concerns about rising capital expenditures highlighted in recent Alphabet and Tesla earnings.