International oil prices have fallen significantly, while the Dow Jones Industrial Average on the New York Stock Exchange rebounded strongly by more than 500 points, driven by easing geopolitical tensions in the Middle East and robust corporate earnings in the second quarter.
The three major stock indexes on Wall Street showed clear divergence. Capital flowed rapidly out of the technology sector, rotating into traditional cyclical industries. The Dow Jones soared 537.24 points, or 1.03%, closing at 52,747.32 points, marking its third consecutive day of gains.
Market data shows the S&P 500 edged up 0.21% to close at 7,428.78 points. In contrast, the Nasdaq Composite fell 0.22%, ending at 24,876.91 points. The semiconductor sector faced significant pressure during this market adjustment. The VanEck Semiconductor ETF (SMH) dropped over 3%, extending its losing streak to four days. Both Advanced Micro Devices (AMD) and Micron Technology suffered losses exceeding 8%. The Technology Select Sector SPDR Fund (XLK) fell to its lowest level since May 7.
Capital is accelerating its return to traditional economic sectors. Benefiting from better-than-expected second-quarter results, Dow component Sherwin-Williams surged 8%, lifting the broader industry. Consumer giant Coca-Cola not only surpassed revenue and profit forecasts but also raised its full-year guidance, sending its shares up 5%. Additionally, strong gains in insurance stocks propelled the Health Care Select Sector SPDR Fund (XLV) and the Financial Select Sector SPDR Fund (XLF) to record highs.
In the energy market, reports indicated that Iran has engaged in discussions with Saudi Arabia and Oman regarding the Strait of Hormuz region, effectively calming concerns about disruptions to shipping supply. Consequently, West Texas Intermediate (WTI) crude oil futures on the New York Mercantile Exchange fell around 4%, settling at $79.26 per barrel. Brent crude oil futures dropped 4.8%, closing at $84.09 per barrel. This oil price decline provided significant support to overall market sentiment.
Commenting on the recent strong sector rotation trend, Ross Mayfield, an investment strategist at the US financial services firm Baird, emphasized that this momentum shift, which has lasted six to eight weeks, is essentially a broad market rotation. He noted that the driving force behind this phenomenon is more about technical market adjustments rather than a fundamental change in the outlook. Mayfield further cautioned that whether the rotation into cyclical, interest-rate-sensitive sectors like consumer discretionary can be sustained depends entirely on the future trajectory of oil prices and interest rates. If the entire yield curve continues to surge, or if crude oil prices approach the $100 per barrel mark, sectors like consumer and financials will be unable to maintain current buying support.
Currently, market participants are closely watching monetary policy moves and major corporate earnings reports. The Federal Reserve is about to hold its policy meeting and announce its latest interest rate decision. Investors widely expect the central bank to hold rates steady, but they are highly focused on any clear signals about the future policy path. According to data from the CME FedWatch Tool, the latest pricing of federal funds futures indicates that the market broadly expects a quarter-point rate cut in September. Meanwhile, technology giants are entering a concentrated earnings reporting period. The market is awaiting the latest results from Amazon, Apple, Meta, and Microsoft to assess the sustained profitability of the tech sector.
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Editor: Long Yunxiang
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