U.S. stock markets closed with mixed results on Tuesday, July 29, as the Dow Jones Industrial Average surged more than 500 points. The move was driven by strong corporate earnings, falling oil prices, and a rotation of capital away from the semiconductor sector into other areas of the market. The Nasdaq Composite ended the session slightly lower as traders processed the latest batch of quarterly reports.
The Dow gained 537.24 points, or 1.03%, closing at 52,747.32. The Nasdaq fell 55.17 points, or 0.22%, to 24,876.91, while the S&P 500 added 15.60 points, or 0.21%, ending at 7,428.78. Dow component Sherwin-Williams rose 8.2% after reporting second-quarter results that beat analyst expectations. Beverage giant Coca-Cola climbed 5% after both revenue and profit exceeded forecasts, prompting the company to raise its full-year outlook.
The Nasdaq's slight decline was tempered by a rebound in software stocks, which helped the tech-heavy index recover from its session lows. However, the chip segment continued to underperform, with the VanEck Semiconductor ETF (SMH) falling more than 3%, marking its fourth consecutive daily decline. Notable losers included Micron, which dropped approximately 10%, and AMD, which fell 8%.
Falling oil prices provided some support to the broader market. This decline followed discussions between Iran, Saudi Arabia, and Oman regarding the Strait of Hormuz. West Texas Intermediate crude futures fell 5% to just above $78 per barrel, while international Brent crude dropped more than 6% to trade around $83.
The market's performance reflects a broad sector rotation that has been underway for several weeks, where so-called "old economy" sectors have gained traction while previously soaring tech stocks have faced headwinds. The Technology Select Sector SPDR Fund (XLK) fell to its lowest level since May 7. In contrast, the Health Care Select Sector SPDR ETF (XLV) and the Financial Select Sector SPDR ETF (XLF) both hit new all-time highs, driven by gains in insurance stocks.
Ross Mayfield, an investment strategist at Baird, commented: "This is a truly broad-based rotation. This story of momentum unwinding has been going on for six to eight weeks, and it is much more about technical market factors than any fundamental change." He added that the continuation of capital flowing into more cyclical and interest-rate-sensitive areas, such as consumer stocks, depends on whether oil prices and interest rates can remain near current levels. "If the yield curve rises across the board and oil prices approach $100 a barrel, it becomes difficult to make a strong case that consumer, financial, or industrial stocks will continue to see buying," Mayfield said.
The Federal Reserve's interest rate decision is scheduled for Wednesday. Investors expect the central bank to hold rates steady, but they will be looking for clearer signals on the future path of monetary policy. According to the CME FedWatch Tool, the latest pricing of federal funds futures indicates a probability of a 25-basis-point rate hike in September.
Tech earnings remain the primary focus for investors this week, with traders awaiting results from Amazon, Apple, Meta Platforms, and Microsoft.
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