Wall Street turned more defensive ahead of the Federal Reserve decision and a new round of megacap earnings, with money moving out of semiconductor, memory, and optical communications names tied to the AI buildout and into software, Apple, and old-economy cash-flow stocks.
Overnight, the Dow Jones Industrial Average rose 1.03%, the S&P 500 gained 0.21%, and the Nasdaq Composite fell 0.22%. Investors bought Coca-Cola, Boeing, healthcare, financials, and industrials while continuing to cut exposure to crowded AI hardware trades. The shift reflected a broader effort to shorten duration, reduce crowding, and trim narrative leverage before the FOMC decision and major tech results.
The S&P 500 equal-weighted index reached a record high, a sign that the broader market was not weakening across the board. The pressure was concentrated in the hardware chain that had previously been pushed to extremes by the AI capex story.
Oil jumped after Iran struck a U.S. target again
Markets had briefly leaned toward the view that an informal ceasefire between Iran and the United States might be taking shape, but that view was challenged again. U.S. Central Command confirmed that Iran launched multiple ballistic missiles early in the day at a U.S. base in Jordan. All of the missiles were intercepted, but the move marked Iran’s first renewed attack on a U.S. target since the U.S. paused strikes on Iran last Friday.
At the same time, Iran’s deputy foreign minister said publicly that if Oman could not accept Iran’s proposed new shipping route plan for the Strait of Hormuz, Iran would continue to close the related route and was prepared to resume war.
WTI crude and Brent crude both rebounded at the open and were up more than 4% intraday after oil had already fallen for three straight sessions.
Gold pulled back from highs and analysts cut forecasts
Despite the renewed geopolitical tension, gold did not post a safe-haven rally. Since hitting a record high of $5,595 per ounce in January, gold has fallen about 22%. The report said gold posted its worst quarter since 2013 in the second quarter as energy inflation linked to the Iran war and rising rate-hike expectations weighed on the metal.
A new Reuters survey showed analysts cut their future gold price forecasts for the first time since late 2023. The survey put average gold prices in 2026 at about $4,509 per ounce, down from the previous quarter’s $4,916 estimate. The 2027 forecast was also lowered, from $5,100 to $4,610.
Institutions broadly said gold had entered a valuation correction after reaching a record high earlier this year as energy prices eased and rate expectations swung back and forth. At the same time, continued central bank buying and fiscal deficit pressure were seen as factors that could limit downside.
Record fed funds futures open interest shows deep FOMC split
Traders are heading into what the report described as one of the hardest FOMC meetings to predict in years. CME data showed open interest in fed funds futures tied to the current meeting reached 967,000 contracts, a record high and a sign that disagreement in the market has climbed to an extreme level.
Current pricing implies a 69.5% probability that the Federal Reserve leaves rates unchanged and a 30.5% probability of a 25-basis-point hike. For the September meeting, markets are pricing a 56.4% chance of cumulative tightening of 25 basis points and a 20.2% chance of cumulative tightening of 50 basis points.
New Federal Reserve Chair Kevin Warsh has become the biggest variable. According to the report, Warsh has reduced forward guidance since taking office and has stressed that the Fed should not commit to future moves in advance. That has removed the sense of pre-meeting pricing certainty that markets had become used to under Jerome Powell.
Jonathan Pingle, chief U.S. economist at UBS, said he had not felt this uncertain about an upcoming rate decision in 20 years, with the last comparable period dating back to when Ben Bernanke had just become Fed chair. In his view, Warsh’s limited policy record and the recent divergence among Fed officials have made the path ahead hard to judge.
Although firms including Citadel Securities see the possibility of a surprise hike, and some market voices have argued for a 50-basis-point increase to reinforce anti-inflation credibility, the main market view still leans toward a hawkish message without immediate action.
AI hardware faces a buyers’ strike while software and blue chips lead
U.S. equities continued to see money leave semiconductors, memory, and optical communications names tied to AI infrastructure, while AI application software, Apple, and traditional blue chips absorbed the flows.
The Philadelphia Semiconductor Index fell 4.49%. At one point it was down more than 6.5%, dropped below 10,800, and hit its lowest level since May 5. It also broke below the key 11,200 support level. That level had held during the July 17 sell-off, but the technical picture has worsened, with the 21-day moving average crossing below the 50-day moving average, a bearish short-term signal.
Memory stocks were hit hardest. Sandisk fell more than 14%, while Micron, SK Hynix ADR, Seagate, and Western Digital each dropped more than 10% intraday. Optical communications names were under similar pressure, with Corning and Coherent both down more than 10%.
The report said traders are focused on three core questions behind the sell-off: whether AI hardware demand has been pulled too far forward, whether hyperscaler capital spending will weigh on free cash flow, and whether Nvidia and the surrounding ecosystem have created a financing loop resembling a capital cycle.
Venu Krishna, head of U.S. equity strategy at Barclays, said concerns around financing uncertainty, rising capital spending, and the free cash flow position of large technology companies have become central to the market conversation. Marija Veitmane, head of equity research at State Street, described the move as a “spiral decline,” saying investors are questioning the sustainability of incremental borrowing and capex. She also said that based on earnings reported so far, end demand remains strong and the pullback may offer a buy-the-dip window for long-term investors.
Company moves and sector performance
Memory stocks remained the center of the sell-off
Sandisk dropped more than 14% and has now fallen by more than 10% for three straight trading days. It is down more than 51% in July. Micron, SK Hynix ADR, Seagate, and Western Digital all fell more than 10% intraday as well. After the close, Seagate reported better-than-expected results, with fourth-quarter revenue of $3.65 billion, above market expectations, and the stock rose nearly 9% after hours.
Optical communications stocks also weakened
Corning fell more than 12% after the company issued third-quarter core sales guidance that came in slightly below Wall Street expectations, while growth in its optical communications business slowed from the pace seen in recent quarters. Coherent fell more than 10%, Lumentum fell more than 8%, Credo, Astera, and Marvell Technology each lost nearly 8%, and Ciena fell more than 7%.
AI software outperformed again
Workday rose more than 8%, while ServiceNow and Adobe gained nearly 5%, and Salesforce added more than 4%.
Big tech and other notable names
Google rose 2.19%. The report said the company has committed guarantees for about $44 billion in data center leasing projects in a push to expand TPU chip sales and compete more aggressively in AI infrastructure.
Apple gained 0.94% and its market value moved above $5 trillion intraday for the first time. The company plans to launch a new Siri-driven smart home hub, a new Apple TV, and a new HomePod mini, and it also announced a new device leasing program in the United States. The report said Apple’s relatively restrained AI spending and strong cash flow discipline are being repriced by the market as a scarce defensive asset.
NVIDIA rose 0.25%. Jensen Huang publicly called for support for open-weight AI models, saying an open ecosystem is critical to the security and competitiveness of the U.S. AI industry. The company also announced an investment of about $5 billion in Safe Superintelligence.
SpaceX rose 2.56%. Elon Musk said Grok 4.6 will be released around Aug. 7 with a 1.5T model size, followed by Grok 4.7 at 2.1T.
EV maker Lucid jumped 21.54% after Saudi Prince Alwaleed bin Talal bought about 19.5 million Lucid shares for $129.5 million, bringing his stake to 5%.
Coca-Cola rose about 5% and hit another record high. Second-quarter comparable revenue was $13.37 billion, up about 6% year over year, while net income came to $4.43 billion. Both topped market expectations, and the company raised its full-year guidance.
Boeing gained about 4.8%. Its second-quarter free cash flow came in above expectations, and the market took that as a sign that the company’s turnaround remains on track.
What markets are watching next
July 30, 02:00: Federal Reserve rate decision
The mainstream expectation is still for no change, but the probability of a 25-basis-point hike remains near 30%. If the Fed surprises with a hike, the U.S. dollar and Treasury yields could move higher quickly, putting pressure on technology stocks, semiconductors, and high-valuation growth shares. If rates stay unchanged but the statement is hawkish, markets may continue to price in September hike risk. If the statement stresses data monitoring and softer employment, risk assets could get near-term relief.
July 30, 02:30: Warsh press conference
Markets will parse Warsh’s comments for his stance on energy inflation, AI capex inflation, slowing employment, and the September policy path. If he stresses anti-inflation credibility and the oil shock, long-end yields could test higher levels again. If he emphasizes data dependence and policy framework review, bonds and growth stocks could rebound.
Major earnings and Samsung Electronics’ full Q2 report
Earnings and conference calls from Microsoft, Meta, Qualcomm, Arm Holdings, Lam Research, Robinhood, SoFi, Starbucks, Mastercard, Shell, Altria, First Solar, and Regeneron are due next. The market is focused on Microsoft’s Azure cloud growth, Copilot monetization, AI capex, and cloud margins, as well as Meta’s advertising growth, AI investment, Reality Labs losses, and capex path.
At 09:00 on July 30, Samsung Electronics will release its full second-quarter results. Markets will be watching HBM, advanced process technology, foundry orders, capex, and details of cooperation with customers including Broadcom. If Samsung confirms that AI memory demand remains strong, that could help stabilize the global memory supply chain. If margins or capex guidance are cautious, memory names including SK Hynix, Micron, Sandisk, and Seagate may remain volatile.