U.S. equity futures are attempting to stabilize after Tuesday’s semiconductor-led selloff. Early Wednesday, S&P 500 futures were up about 0.1%, Nasdaq 100 futures were up 0.2% and Dow futures were up 0.1%. The Russell 2000 fell 1.3% Tuesday, leaving small caps exposed to the same long-duration yield pressure weighing on Technology. Investors are focused on today’s FOMC minutes and Treasury auction as long-term borrowing costs remain near multi-decade highs.
U.S. equities declined Tuesday, with the S&P 500 down 0.69%, the Dow down 0.22%, the Nasdaq down 1.33% and the Russell 2000 down 1.3%. The Philadelphia Semiconductor Index tumbled 5%, making chips the principal source of index pressure as higher long-term yields compressed growth valuations. Trading volume totaled 14.86 billion shares, below the recent 20-session average of 16.88 billion.
Sector performance reflected another rotation away from AI and cyclicals toward defensives and Energy. Energy led with a 1.79% gain, followed by Health Care +1.59%, Consumer Staples +1.06% and Financials +0.45%. Utilities, Consumer Discretionary, Real Estate and Communication Services posted smaller declines, while Technology fell 1.93%, Industrials lost 1.46% and Materials declined 0.92%. Breadth was weak, with decliners leading 1.88:1 on the NYSE and 1.69:1 on the Nasdaq.
Treasury yields eased from intraday peaks but remain restrictive. The 2-year yield fell 1 basis point to 4.17%, the 10-year declined 2 basis points to 4.70% and the 30-year fell 3 basis points to 5.28%. The long bond is near 5.27% this morning after touching 5.337% Tuesday, its highest level in nearly two decades. Investors remain concerned about persistent inflation, fiscal deficits and heavy government debt supply.
The DXY ended Tuesday at 99.66 but is softer near 99.4 this morning. The euro has strengthened toward $1.1603, while the dollar is near ¥159.1. September WTI crude rose 0.57% Tuesday to $84.98 and is up again near $85.48, with Brent around $91.62, as fading hopes for a U.S.-Iran agreement keep the Strait of Hormuz risk premium elevated. December gold fell 1.69% Tuesday to $4,398.20, but spot gold is rebounding about 0.5% near $4,356 as the dollar and global bond yields ease.
Tuesday’s economic data highlighted the widening gap between housing and AI-driven manufacturing. Single-family housing starts fell 9.9% in July to an 808,000 annualized pace, the lowest since November 2022, while total starts dropped 12.4% to 1.239 million. Manufacturing output, however, increased 0.2%, with semiconductor production up 2.4% and information-processing equipment up 1.5%, reflecting continued AI infrastructure investment.
Today’s main catalyst is the Federal Reserve’s July meeting minutes, due this afternoon, with investors looking for detail on the committee’s split over inflation and the next move in rates. The Treasury will also sell $16 billion of 20-year debt, an important test of demand with long yields already near multi-decade highs. Retail earnings from Target, TJX and Lowe’s will provide another direct read on the consumer following last week’s weak retail-sales report.
Company News by GICS Sector
Information Technology
- Nvidia (NVDA -2.3%) fell Tuesday as higher long-term yields pressured AI valuations, while the Philadelphia Semiconductor Index dropped 5%.
- Micron (MU -7.0%), SanDisk (SNDK -9.0%) and Western Digital (WDC -7.4%) were among the largest chip and storage decliners as investors unwound recent momentum positions.
- SK Hynix announced a roughly $28 billion share-buyback program, supporting its U.S.-listed shares in premarket trading despite sharp weakness in its Korean shares. Analog Devices (ADI) also reports today, providing another read on industrial and AI semiconductor demand.
Consumer Discretionary
- Home Depot (HD -0.1%) was little changed Tuesday after beating second-quarter sales and profit expectations. Revenue increased 5.7% to $47.86 billion, while U.S. comparable sales rose 1.3%; management maintained its full-year outlook but continued to flag weakness in large remodeling projects.
- Lowe’s (LOW) reports before the open, with Pro demand, big-ticket remodeling and the impact of high mortgage rates in focus.
- La-Z-Boy (LZB -19% premarket) dropped after reporting a quarterly loss and an unexpected decline in sales.
- TJX Companies (TJX) reports today, providing an important contrast between value-oriented off-price retail and weaker discretionary spending elsewhere.
Consumer Staples
- Target (TGT) reports before the open, with traffic, discretionary-category sales, margins and management’s consumer outlook likely to drive the reaction.
- Estée Lauder (EL) forecast fiscal-year adjusted EPS of $3.10–$3.35, with the midpoint above consensus, while quarterly sales of $3.63 billion exceeded expectations. Management cited improving China demand and strength in premium fragrance and skincare.
