Dow drops 450 points as Fed decision, chip selloff weigh on US stocks

• Semiconductor stocks extended losses for multiple sessions as investors questioned whether heavy AI capital expenditure by tech giants would translate into financial returns, with SK Hynix missing expectations and US chip stocks like Applied Materials and SanDisk falling
• Markets await critical earnings from Microsoft and Meta after the close, followed by Amazon and Apple later in the week, which are expected to provide clarity on AI investment plans and chip demand
• Oil prices surged nearly 7% to around $89.90 per barrel after US military forces intercepted ballistic missiles in the Middle East, adding inflation uncertainty as the Fed is widely expected to hold rates steady

Market Summary: US Stocks Drop on Fed Decision and Chip Sector Weakness

Key Market Movements:

US equity markets opened lower on Wednesday, July 29, 2026, with the Dow Jones Industrial Average falling over 450 points. The S&P 500 remained relatively flat while the Nasdaq Composite declined 0.19%.

Semiconductor Sector Under Pressure:

Chip stocks experienced continued selling pressure, extending a multi-day decline driven by investor concerns over AI infrastructure spending sustainability and Chinese competition. South Korean chipmaker SK Hynix disappointed investors, triggering weakness across US semiconductor names including Applied Materials, Micron, and SanDisk. Markets are questioning whether substantial AI capital expenditures will translate into timely financial returns.

Company-Specific News:

• Procter & Gamble (PG): Dropped 3.9% after missing quarterly revenue expectations and guiding for slower revenue growth
• Ford Motor: Surged 4.3% following its second full-year profit outlook increase this year

Federal Reserve Focus:

Markets await the Fed's policy decision, with interest rates expected to remain unchanged. Investors are closely monitoring Fed Chair Kevin Warsh's commentary for insights on inflation and future monetary policy direction.

Geopolitical and Commodity Developments:

West Texas Intermediate crude oil spiked nearly 7% to approximately $89.90 per barrel following heightened Middle East tensions after attacks on US forces. President Trump indicated the US would respond to these attacks, adding uncertainty to markets already balancing inflation risks.

Earnings Season Context:

Despite current weakness, Q2 earnings season remains strong, with over 85% of reporting S&P 500 companies beating analyst expectations—well above the 68% historical average. Key Big Tech earnings from Microsoft, Meta, Amazon, and Apple are expected to provide clarity on AI spending trends.