US stock indexes closed mixed on Tuesday as a retreat in semiconductor and software shares weighed on the Nasdaq 100, while the Dow Jones Industrials notched an all-time high. The S&P 500 finished 0.57% lower, the Dow rose 0.64%, and the Nasdaq 100 ended down 1.89%, with futures also pointing to continued pressure in tech into the next leg of the policy week.
Investors focused on fresh macro signals, including weaker-than-expected US housing data, alongside a sharp drop in crude oil that helped ease inflation expectations. Markets are now turning to a two-day FOMC meeting that began Tuesday, the first under new Fed Chair Kevin Warsh.
Key takeaways
- S&P 500 fell 0.57%, Nasdaq 100 dropped 1.89%, while the Dow rose 0.64%—a split driven by weakness in technology and energy-linked stocks.
- Crucial catalysts were chip and software selloffs, plus softer US housing starts and permits, with crude oil dropping more than 5%.
- Falling oil supported Treasuries and tempered inflation expectations, keeping bond markets responsive ahead of the Fed meeting.
- Next implication: attention will shift to the Fed’s two-day meeting and Chair Warsh’s messaging on inflation and the policy path.
What drove the move
Tuesday’s index performance reflected a tug-of-war between rate-sensitive gains and broad pockets of weakness. Chipmakers weighed on the broader market, with Marvell Technology down more than 9% and Intel down more than 8%. Other semiconductor names also retreated, including Advanced Micro Devices and KLA Corp, both down more than 7%, and Micron Technology down more than 6%.
Software stocks followed through with declines. Atlassian fell more than 3%, while ServiceNow, Oracle, and Workday dropped more than 2%. Larger-cap software names also ended lower, including Microsoft and Salesforce, each down more than 1%.
Energy and related sectors also moved lower after oil prices slid. WTI crude dropped more than 5% to a 3.5-month low as markets reacted to developments around the US-Iran agreement and expectations for the Strait of Hormuz reopening and a pickup in oil supply.
On the macro calendar, US housing data came in weaker than expected. May housing starts fell 15.4% month over month to 1.177 million, missing expectations of 1.430 million. May building permits, a proxy for future construction, declined 0.7% month over month to 1.413 million, slightly below expectations of 1.418 million. Separately, the US May import price index excluding petroleum rose 0.8% month over month, stronger than expectations of 0.5%.
Oil, Treasuries and the macro narrative
Crude’s sharp decline provided support elsewhere in markets. Investors cited the drop in oil as a factor that eased inflation expectations, which in turn boosted demand for Treasuries. The 10-year T-note yield fell about 5 basis points to 4.422% after oil prices plunged more than 5%.
Tuesday’s Treasury moves were also supported by the weaker housing report. With oil forecast dynamics tied to the Strait of Hormuz reopening, market participants increasingly looked for a potentially less inflationary path ahead, creating a more constructive backdrop for bonds.
European rates also moved lower. The 10-year German bund yield ended at 2.930%, down 2.4 basis points, while the 10-year UK gilt yield fell to 4.788%.
Market reaction and sector winners/losers
Index-level performance remained uneven across regions. In Europe, the Euro Stoxx 50 closed up 0.45%. China’s Shanghai Composite slipped 0.11%. Japan’s Nikkei 225 finished up 0.13% and reached a new all-time high.
Within US equities, energy-linked names generally fell alongside crude. Haliburton finished down more than 2%, and other notable decliners included APA Corp, Valero Energy, Baker Hughes, and ConocoPhillips, each down more than 1%. Cybersecurity and software also posted broad declines, with Zscaler down more than 2% and Okta, Fortinet, CrowdStrike, and Palo Alto Networks down more than 1%.
There were notable single-stock exceptions. Take-Two Interactive Software rose more than 6% after Piper Sandler estimated the company could see 46 million unit sales of Grand Theft Auto VI at launch. Space Exploration Technologies climbed more than 4% and added to a strong recent run following a record $75 billion IPO that was described as more than four times oversubscribed. Valmont Industries gained more than 2% after projecting $5.4 billion in organic net sales and an EPS target of $35 by end-2029. Edwards Lifesciences rose more than 2% after the US government published a coverage proposal for transcatheter aortic valve replacement.
Bigger picture: the Fed meeting in focus
With policy uncertainty returning to the spotlight, the immediate catalyst for markets is the two-day FOMC meeting that began Tuesday. While rates are expected to remain unchanged, investors will focus on Chair Warsh’s approach in the post-meeting press conference and the Fed’s outlook for inflation.
The market pricing discussed in the session indicated a 5% chance of a 25-basis-point rate hike by the conclusion of the Tuesday/Wednesday meeting. Expectations around oil supply and its impact on inflation are likely to play a role in how investors interpret the Fed’s messaging.
Outside the US, additional rate signals also shaped expectations. For example, swaps were described as discounting an 18% chance of a 25-basis-point ECB rate hike at the ECB’s July 23 meeting, while Eurozone labor cost data was revised downward to 3.2% year over year from 3.4% previously reported.
Looking ahead, investors will watch the FOMC statement and Chair Warsh’s guidance closely for clues on inflation persistence and the timing of any future rate changes. With oil prices having already moved sharply, market participants will likely monitor whether softer housing data and easing inflation expectations persist into Friday’s broader data flow.
