Late trading: Dow rose about 600 points, Nasdaq fell slightly
In the early morning of July 29th, Beijing time, U.S. stocks traded at the end of Tuesday, with the major stock indexes diverging. Traders are digesting the latest batch of corporate earnings reports, while the semiconductor sector continues to be under pressure. The Dow rose 596.86 points, or 1.14%, to 52806.94 points; the Nasdaq fell 24.29 points, or 0.10%, to 24907.79 points; the S&P 500 rose 23.77 points, or 0.32%, to 7436.95 points. Dow component Sherwin-Williams led gains in the benchmark index, rising 8% on better-than-expected second-quarter results. Also a component of the Dow Jones Industrial Average It also rose about 6% after results exceeded expectations. The S&P 500 rose 0.4%, while The composite index ended slightly lower after falling deeply in early trading. VanEck Semiconductor ETF (SMH) fell 3%, with (Micron) led the decline with a 9% decline. Arm Holdings and Teradyne ) fell 7% respectively. Tuesday's losses put the Nasdaq 100 near correction territory, down about 10% from its closing all-time high. The moves reflect a broad sectoral rotation the market has seen in recent weeks, with so-called "old economy" sectors getting a boost while previously surging technology stocks took a hit. The technology sector SPDR fund fell to its lowest level since May 7. Meanwhile, the State Street Healthcare Sector SPDR ETF and the Financial Sector SPDR ETF hit all-time highs, led by gains in insurance stocks. "This is a really broad sector rotation," said Ross Mayfield, investment strategist at Baird. "This momentum-clearing story has been going on for six to eight weeks and it has much more to do with technical factors in the market than any fundamental changes." Wall Street had a choppy session in the last session. The Dow rose while the Nasdaq retreated as unwinding in the semiconductor sector weighed on the tech-heavy index. Market jitters reflect uncertainty ahead of a packed week of earnings releases from big tech stocks - this week , Meta Platforms and It will also release earnings this week. The direction of the chip sector hinges on whether the hyperscalers can keep spending even as the tech giants themselves show signs of weakness. Still, Mayfield believes an upcoming batch of tech earnings is unlikely to stem the recent trend of capital outflows from the sector, at least in the short term. The strategist said: "Even if many of these technology stocks turn in pretty good quarterly earnings, it will not be enough to justify the current trend...The momentum clearing is partly to rebalance prices and earnings expectations." However, Mayfield pointed out that the rotation of funds into more cyclical and interest-rate sensitive sectors such as consumer goods will depend on whether oil prices and interest rates can remain near current levels. "If the yield curve as a whole moves higher and oil prices approach $100 a barrel, it's hard to make a strong case that consumer, financial or industrial stocks will continue to be bought," Mayfield said. The Fed's interest rate decision will be announced on Wednesday. Investors expect the central bank to stay on hold but will seek more clear signals on the path of monetary policy. According to data from the CME FedWatch tool, the latest pricing of federal funds futures indicates the probability of a 25 basis point interest rate hike in September. "Our judgment remains unchanged," Padraic Garvey, ING's regional head of research for the Americas, said in a report Tuesday morning. "We believe inflation expectations are benign enough to be reassuring. In addition, the structure of the yield curve does not support a rate hike cycle. Specifically, the 5-year yield is expensive relative to the curve." Traders are also keeping a close eye on oil prices as Iran holds talks with officials from Saudi Arabia and Oman to discuss reopening the Strait of Hormuz to shipping. Crude oil extended Monday's sharp losses, with Brent crude falling 1.8% to $86.80 a barrel and WTI crude falling 1.4% to $81.50 a barrel.