On the 28th (local time), the three major U.S. stock indexes ended mixed.
On the New York Stock Exchange (NYSE), the blue chip–heavy Dow Jones Industrial Average rose 537.24 points, or 1.03%, to close at 52,747.32 from the previous transaction day. In contrast, the tech-heavy Nasdaq composite fell 55.17 points, or 0.22%, to 24,876.91. The large-cap–focused Standard & Poor's (S&P) 500 rose 15.61 points, or 0.21%, to finish at 7,428.79.
In the stock market that day, a so-called rotation—investment funds moving from one sector to another—showed up strongly. Money flowed out of artificial intelligence–related tech stocks that had led the market's rise and into traditional industries that had been relatively overlooked. The S&P 500 equal-weight index, which excludes market-cap weighting and assigns the same weight to every stock, hit a record high that day.
Ulrike Hoffmann-Burchardi of UBS's chief investment office said, "While demand for artificial intelligence is solid and the outlook for semiconductors is positive, ways to generate revenue are not limited to AI-related stocks." It means the investor fervor that had concentrated on a handful of tech names is spreading across a broader range of industries.
In fact, semiconductor stocks tumbled sharply that day. The VanEck Semiconductor exchange-traded fund (ETF), which invests across the semiconductor industry, fell more than 3%, marking a fourth straight session of weakness. Micron dropped about 10%, and AMD also fell 8%. Shares of SanDisk, a flash memory–specialized corporations, have plunged 50% from the June peak, when they had surged on the AI frenzy. Concerns about overvaluation driven by the AI investment boom and skepticism over excessive capital expenditure are weighing on tech stocks broadly. SK hynix ADR also sank 9%.
By contrast, sturdy traditional corporations that released strong second-quarter results filled the gap left by tech. Paint maker Sherwin-Williams beat market expectations and jumped 8%. Coca-Cola, the world's largest beverage corporations, also climbed nearly 5% after both revenue and profit topped estimates and it raised its full-year outlook. As funds moved into traditional industries, healthcare and financial institutional sector ETFs hit intraday record highs on strength in insurers.
Falling international oil prices also had a positive impact across the market. Iran discussed the Strait of Hormuz issue with Saudi Arabia and Oman that day. Tensions in the Middle East appeared to ease somewhat after U.S. President Donald Trump assessed his talks with Iran positively. West Texas Intermediate (WTI) futures fell 5% to around $78 a barrel. Brent also dropped more than 6% to finish transactions around $83. It was the largest three-day decline since 2020.
When oil stabilizes, inflationary pressure eases and the U.S. Central Bank, the Federal Reserve, has more room to run currency policy. Angelo Kourkafas of Edward Jones said, "Assuming oil does not set a new record high, the U.S. consumer price index likely peaked in May." He noted, "With June inflation readings cooling, the Federal Reserve has gained time over the summer to monitor energy supply disruptions and the trajectory of inflation."
Investors expect the Federal Reserve to hold the benchmark rate steady at Wednesday's decision. Attention is on whether there will be a clear signal of earlier rate cuts. According to the CME FedWatch tool, markets see a 0.25-percentage-point cut in September as likely.
Investor attention is also fixed on earnings releases from big tech corporations slated throughout the week. Microsoft, Meta, Apple and Amazon will report in succession during the week. Apple, which the day before regained the No. 1 spot in market capitalization from Nvidia, intraday surpassed $5 trillion in market value for the first time ever. Unlike other tech corporations that are pouring massive funds into AI facility investment, Apple is keeping capital expenditure low while pursuing a strategy of efficiently leveraging Google's cloud infrastructure and AI technology.
Max Kettner at HSBC Holdings said, "The second-quarter earnings season has gotten off to a smooth start," calling "the recovery in the U.S. economic outlook and the easing burden of equity valuation a positive catalyst."