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

• The Fed is expected to hold rates steady, but traders still anticipate at least one quarter-point increase later in 2026; Chair Kevin Warsh's comments will be closely watched for inflation and policy guidance
• Semiconductor stocks continued multi-day selloff after SK Hynix disappointed, with investors questioning AI spending sustainability ahead of critical earnings from Microsoft, Meta, Amazon, and Apple
• Oil jumped nearly 7% to $89.90/barrel after US forces intercepted missiles in the Middle East, heightening inflation concerns; meanwhile, 85% of S&P 500 companies have beaten earnings expectations this quarter

Market Summary: Fed Decision and Chip Weakness Drive Selloff

Key Market Movements:

US equities opened sharply lower on July 29, 2026, with the Dow Jones falling 450 points. The S&P 500 traded flat while the Nasdaq Composite declined 0.19%. Markets faced pressure from multiple headwinds including the pending Federal Reserve policy decision and continued weakness in semiconductor stocks.

Sector Performance:

Semiconductor stocks extended their losing streak, marking four consecutive down sessions amid concerns over AI infrastructure spending returns and Chinese competition. South Korean chipmaker SK Hynix disappointed markets, triggering selling across US chip stocks including Applied Materials and SanDisk.

Corporate Highlights:

• Procter & Gamble: Down 3.9% after missing quarterly revenue expectations and forecasting slower revenue growth
• Ford Motor: Rose 4.3% on raising its full-year profit outlook for the second time in 2026
• Upcoming earnings: Microsoft and Meta Platforms report after Wednesday's close, followed by Amazon and Apple later in the week

Fed Policy and Economic Indicators:

The Federal Reserve is expected to hold interest rates steady, with markets pricing in at least one quarter-point increase later this year. Investors await commentary from Chair Kevin Warsh on inflation and monetary policy direction.

Geopolitical Risks:

Oil prices surged nearly 7% to $89.90 per barrel (WTI) following Middle East tensions after President Trump pledged a US response to attacks on American forces. The spike adds inflation pressure complicating the Fed's policy outlook.

Earnings Season Context:

Over 85% of S&P 500 companies reporting have beaten analyst expectations, significantly above the 68% historical average, providing underlying support despite current volatility.