Market snapshot
Stocks in the United States closed with modest losses as investors exercised caution ahead of a wave of high-profile quarterly reports. The Nasdaq Composite led declines, the S&P 500 slipped modestly and the Dow Jones Industrial Average finished nearly unchanged.
By the close, the Dow Jones Industrial Average had fallen 6.06 points, or 0.01%, to 52,218.58. The S&P 500 lost 10.24 points, or 0.14%, to 7,498.96, while the Nasdaq Composite dropped 146.30 points, or 0.57%, to 25,690.90.
Big Tech earnings in focus
Investors were closely watching second-quarter results due after the bell from Alphabet and Tesla, the first of the so-called "Magnificent Seven" megacap companies scheduled to report. Market participants were looking for confirmation that the multibillion-dollar investments these companies have made in artificial intelligence are beginning to pay off.
Trading in Alphabet was volatile, and the stock finished the regular session down 1.5%. Commentary noted heightened scrutiny following a delay in the launch of a model central to Alphabet’s AI plans. Tesla closed the regular session down 1.3% and extended losses in after-hours trading, falling further after reporting negative free cash flow in the second quarter for the first time in more than two years.
Texas Instruments showed a mixed pattern: the stock finished the regular session up 1%, but then lost ground in extended trading after releasing results and issuing a current-quarter revenue forecast that exceeded expectations.
Semiconductor and software divergence
Momentum across the market has become uneven following months of gains from March lows, with particular variability among heavyweight semiconductor names and a softer tone in software stocks. The Philadelphia SE Semiconductor index recovered from early weakness to finish up 0.4%, marking its third consecutive session of gains after three prior sessions of losses that had recently confirmed a bear-market status for the group.
"Investors have become a lot more discerning and specific as to where they’re choosing to invest in the AI trade," said Kevin Gordon, head of macro research and strategy at Charles Schwab, pointing to the noticeable performance gap between software companies and chipmakers on the day.
Geopolitical tensions lift oil, stoke inflation concerns
Geopolitical developments in the Middle East added another layer of caution. Crude oil futures settled at their highest level since June 11, rising roughly 3% on the day after Yemen’s Iran-backed Houthi militia threatened shipping in the Red Sea, a critical maritime chokepoint alongside the Strait of Hormuz.
The situation drew sharp rhetoric on the U.S. side: U.S. President Donald Trump vowed on Wednesday to destroy an Iranian bridge or power plant every time Iran shoots at a ship in the strait. Higher oil prices fed worries about inflation, prompting some investors to favor defensive sectors such as utilities while energy and materials moved higher.
Notable stock movers and sector action
Server maker Super Micro Computer led S&P 500 percentage gainers, rallying 19.8% after announcing it had secured more than $60 billion in new orders in the fourth quarter. Peer stocks reacted: Dell Technologies climbed 9.3% and Hewlett Packard Enterprise added 3% following Super Micro’s upbeat preliminary results.
Other movers included AT&T, which rose 3.5% after reporting it added more wireless subscribers than expected in the second quarter, and Philip Morris International, whose shares increased 3.3% after stronger cigarette demand helped it top quarterly estimates.
Market breadth and volume
Market breadth favored decliners. On the New York Stock Exchange, declining issues outnumbered advancing issues by a 1.26-to-1 ratio, with 142 new highs and 161 new lows recorded. On the Nasdaq, 1,665 stocks rose and 3,103 fell, a 1.86-to-1 ratio in favor of decliners. The S&P 500 posted 14 new 52-week highs and 2 new lows, while the Nasdaq Composite recorded 45 new highs and 104 new lows.
Trading activity was relatively light: about 15.16 billion shares changed hands on U.S. exchanges, below the 20-session moving average of 19.05 billion shares.
Fed outlook and market expectations
A Reuters poll median forecast indicated the Federal Reserve is expected to hold interest rates steady for the remainder of 2026. Despite that central expectation, survey respondents continued to signal that the risk of another rate hike remains elevated.
Traders were pricing in roughly a 66% chance that the Fed will leave rates unchanged at its next meeting, according to the CME Group’s FedWatch tool, reflecting a view that policy will remain on hold in the near term but with uncertainty still present.
Looking ahead
The concentrated schedule of earnings from megacap technology companies and broader corporate results leaves markets exposed to potentially sharper moves in the coming days. Geopolitical developments affecting shipping lanes and energy prices add a parallel source of volatility, influencing inflation expectations and investor positioning across defensive and cyclical sectors.
With multiple catalysts converging - earnings, oil prices and Fed expectations - market participants are balancing optimism about AI-driven investment gains against a tighter risk backdrop shaped by geopolitical and macroeconomic variables.