The three major U.S. stock indices closed mixed on July 28, as traditional industrial stocks like Coca-Cola and Boeing lifted the Dow, while semiconductor stocks fell sharply amid ongoing concerns over AI investments.
The Dow Jones Industrial Average finished up 537.24 points, or 1.03%, at 52,747.32. The S&P 500 rose 15.60 points, or 0.21%, to close at 7,428.78. In contrast, the tech-heavy Nasdaq Composite dropped 55.17 points, or 0.22%, ending at 24,876.91.
Market trends showed a clear shift of funds from semiconductor stocks to sectors like consumer goods and healthcare, which saw relatively smaller gains.
The Philadelphia Semiconductor Index plummeted 4.5%, marking a nearly 25% decline from its record high close on June 22. Micron Technology fell 8.9%, AMD dropped 8.1%, and Intel decreased by 5.9%. Broadcom also saw a 0.7% decline. However, Nvidia managed to recover from earlier losses, closing up 0.3%.
Concerns over Alphabet's large-scale AI investment plans have heightened worries about the return on investment, as major tech companies like Microsoft and Meta prepare to announce their earnings. Investors are particularly focused on whether the expansion of AI data center investments will translate into actual revenue and profit growth.
In contrast to the semiconductor sector, companies that exceeded market expectations performed well. Coca-Cola raised its annual revenue and net income forecasts, resulting in a 5% increase in its stock price. Boeing's shares rose 4.8% due to improved cash flow. IQVIA, a clinical trial services company, surged 14% after raising its annual profit outlook.
On the other hand, Corning, a specialty glass manufacturer, saw its stock drop 12% as its revenue forecast fell short of market expectations.
By sector, healthcare rose 2.4%, consumer staples increased 2.0%, and materials gained 1.7%. Technology stocks fell 1.4% due to the weakness in semiconductor shares. Among S&P 500 constituents, the number of advancing stocks was about 2.5 times that of declining stocks, indicating a generally positive market sentiment.
Among large tech stocks, Apple closed up about 1% at $340.08, reaching an intraday high of $342.89, which marked its market capitalization surpassing $5 trillion for the first time. Microsoft rose 1.1%, and Alphabet increased by 2.2%. Amazon, Meta, and Tesla experienced slight declines.
The sharp drop in international oil prices eased pressure on both the stock and bond markets. Concerns over oil supply disruptions have lessened following a temporary halt in military clashes between the U.S. and Iran.
Brent crude for September delivery closed down 4.8% at $84.09 per barrel, while West Texas Intermediate (WTI) fell 4.1% to $79.26, both reaching their lowest levels in about two weeks.
The decline in oil prices has alleviated some inflation concerns, leading to a drop in U.S. Treasury yields. The yield on the 10-year Treasury note fell to 4.604%, while the yield on the more sensitive two-year note dropped to 4.275%.
Market participants are closely watching the Federal Reserve's interest rate decision set for July 29. According to the CME FedWatch, the market sees a 71% chance that the Fed will keep rates unchanged, while a 29% probability exists for a 0.25 percentage point increase.
Microsoft and Meta are scheduled to report their quarterly earnings on July 29, while Apple and Amazon will follow on July 30. Investors are expected to scrutinize not only these companies' earnings but also the scale of their AI-related investments and future profitability outlook.
* This article has been translated by AI.
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