Post-Market Update — Tuesday, July 28, 2026

U.S. stocks finished mostly higher Tuesday, but the headline indexes masked a significant rotation beneath the surface. The Dow gained roughly 1.1%, the S&P 500 added about 0.3%, and the Nasdaq finished near the flat line as investors moved away from semiconductor stocks and into consumer staples, healthcare, industrials, and other areas that had lagged the AI-driven rally. Advancing S&P 500 stocks outnumbered decliners by approximately 2.6 to 1.

Semiconductors remained the major source of weakness. The PHLX Semiconductor Index fell more than 4%, while Micron, AMD, and Applied Materials posted sharp declines. Selling was driven by renewed questions about AI infrastructure spending, stretched valuations, leverage within the AI ecosystem, and reports of progress in China’s domestic chipmaking capabilities. South Korea’s Kospi plunged more than 10%, briefly triggering a circuit breaker.

Outside technology, earnings provided meaningful support. Coca-Cola rallied after raising its annual forecasts, Boeing gained after producing positive free cash flow, and Sherwin-Williams and Illinois Tool Works advanced following better-than-expected results. Apple also moved higher and briefly reached a $5 trillion market valuation.

Geopolitics continued to influence energy and interest-rate expectations. Oil declined approximately 4% to 5% as the pause in U.S. attacks on Iran and hopes for negotiations involving traffic through the Strait of Hormuz reduced immediate supply fears. The retreat in oil helped pull the 10-year Treasury yield toward 4.60% and reduced expectations that the Federal Reserve will raise rates Wednesday.

Consumer confidence also came in softer than expected, falling to 90.8 from 92.2, adding to the decline in yields. The dollar eased slightly but remained near a one-month high, while gold remained under pressure as traders prepared for the Fed decision.

What traders are watching next: Wednesday’s Federal Reserve decision and commentary will be the primary macro catalyst. Microsoft and Meta earnings will then provide an important test of whether the market’s enormous AI-related investment can continue producing enough growth and cash flow to justify current valuations.