U.S. Market Recap: Equal-Weighted S&P 500 Hits Record High Despite Sharp Chip Stock Selloff and Plunging Oil Prices

U.S. markets posted notable divergence on Tuesday. Broad-market gains pushed the equal-weighted S&P 500 index to a fresh all-time high, offsetting steep losses across the semiconductor sector. Meanwhile, crude oil prices continued to slide, notching their worst three-day drop in more than six years.

Major indexes traded sharply out of sync. The benchmark S&P 500 closed 0.2% higher, while the tech-heavy Nasdaq 100 fell 1%, after trading even lower and nearing correction territory during the session. Semiconductor stocks faced intense selling pressure, with the Philadelphia Semiconductor Index tumbling 4.5% at the close, having plunged as much as 6.5% intraday. Micron Technology and SanDisk ranked among the biggest laggards within the S&P 500, leading the sector-wide selloff.

Torsten Slok, Chief Economist at Apollo Global Management, attributed the chip stock slump to growing market concerns. He explained that projected spending growth among hyperscale data center operators has outpaced their anticipated cash flow expansion, raising investor doubts over how quickly capital expenditures can translate into solid corporate profits and triggering capital outflows from the sector.

In commodity markets, crude oil extended its downward trajectory, recording its worst three-day performance in over six years. West Texas Intermediate (WTI) crude fell 4.2%, settling near $79 per barrel.

Helima Croft, Chief Commodity Strategist at RBC Capital Markets, wrote in a report that reports of halted bombings and progress in related negotiations triggered the latest sharp drop in oil prices. Nevertheless, she remained highly skeptical of an imminent major diplomatic breakthrough. Croft noted that persistent threats from missiles, naval mines, drones, and regional shipping tolls will keep most market participants sidelined, with geopolitical risks far from fully resolved.

Market sentiment turned cautious as investors awaited key policy announcements and a wave of corporate earnings releases later in the week. Microsoft and Meta Platforms Inc. are scheduled to report earnings after Wednesday’s close. Buoyed by positive earnings expectations, Microsoft shares edged higher on Tuesday. According to Bloomberg Intelligence data, growth companies that have reported results so far this quarter have delivered robust earnings, with approximately 94% beating market consensus estimates.

Corporate earnings released on Tuesday painted a mixed picture. Corning sold off sharply after issuing weaker-than-expected sales guidance. United Parcel Service (UPS) declined after warning of potential delivery volume declines later this year. In contrast, Coca-Cola raised its full-year outlook, driven by surging demand fueled by World Cup sponsorship and consumer activity. In a standout stock move, electric vehicle maker Lucid Group Inc. surged 22% following news that Saudi Prince Al-Waleed bin Talal bin Abdulaziz Al Saud had acquired a 5% stake in the company.

JPMorgan analysts argued that the market’s current 30% implied probability of a rate hike is overpriced, with actual tightening odds lower than widely expected. They pointed out that while inflation remains elevated, it shows no signs of accelerating further. The bank pegged a 50% probability that the Fed will maintain its hawkish stance, emphasizing that policymakers will remain vigilant against inflation risks despite recent deflationary signals from falling energy prices.

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