The Dow Jones Industrial Average rose 263 points on Monday, while the S&P 500 posted a marginal gain, as strength in defensive sectors offset persistent weakness in semiconductor stocks. The Nasdaq Composite ended lower, dragged down by chipmakers facing renewed headwinds from China's domestic manufacturing advances.
The Dow closed at 52,210.08, up 0.51%, while the S&P 500 inched up 0.02% to 7,413.18. The Nasdaq slipped 0.18% to 24,932.08, as investors rotated into consumer staples and healthcare amid a cautious tone ahead of a packed week of corporate earnings, inflation data, and the Federal Reserve's interest rate decision.
Chip Stocks Under Renewed Pressure
Semiconductor stocks extended their recent decline, though they recovered from session lows after a volatile day of trading. The VanEck Semiconductor ETF (SMH) continued its slide, with Advanced Micro Devices falling roughly 5%, Teradyne dropping 4%, and Micron Technology losing about 2%. US-listed shares of ASML also declined nearly 6%.
Sentiment initially improved after Chinese memory-chip manufacturer ChangXin Memory Technologies (CXMT) made a blockbuster debut on the Shanghai Stock Exchange. However, gains quickly reversed on reports that China has begun developing domestic deep ultraviolet (DUV) lithography machines used in semiconductor manufacturing, raising concerns about intensifying competition for US chipmakers.
The sector has also been under pressure as investors reassess artificial intelligence-related investments following recent earnings from Alphabet and Tesla that highlighted rising AI spending. Despite the selloff, the Philadelphia Semiconductor Index remains up about 63% in 2026, though it has fallen roughly 20% from its record high in late June.
Oil Tumbles on US-Iran De-escalation Hopes
Oil prices plunged after the United States paused its military campaign against Iran and President Donald Trump said Washington was holding talks with Tehran, easing immediate concerns about supply disruptions. Brent crude futures settled down 8.7% at $88.36 a barrel, while West Texas Intermediate crude fell 7.5% to $82.61, both reaching their lowest levels in more than a week.
The decline in oil weighed on energy stocks, with Occidental Petroleum and Exxon Mobil both closing lower. The drop in crude prices also boosted risk appetite in broader markets, as seen in the FTSE 100's 0.4% rise on similar de-escalation hopes.
Fed Decision and Big Tech Earnings in Focus
Investors are now turning their attention to the Federal Reserve's policy announcement on Wednesday. According to the CME FedWatch Tool, traders currently assign a 62% probability that the central bank will leave interest rates unchanged this week, while also pricing in a meaningful possibility of a rate increase.
Thursday's release of the June Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge, will provide additional clues on the interest-rate outlook. The AI-driven surge on Wall Street has added to inflation pressures, complicating the Fed's path.
Upcoming quarterly results from Microsoft, Amazon, Meta Platforms, and Apple are expected to offer fresh insight into artificial intelligence spending. Analysts expect S&P 500 companies to report aggregate second-quarter earnings growth of about 39% from a year earlier, with AI-related companies accounting for a significant share of that expansion.
Outside technology, consumer staples and healthcare were among the strongest-performing sectors on Monday as investors rotated into more defensive areas of the market.
This article is for informational purposes only and does not constitute financial advice.
