S&P 500, Nasdaq, Dow decline; oil rally intensifies AI slide ahead of Fed

Name: S&P 500, Nasdaq, Dow decline; oil rally intensifies AI slide ahead of Fed
Uploaded: 2026-07-29T17:38:02+02:00
Description: U.S. cash markets traded sharply lower on Wednesday, with the S&P 500 down 0.7% as of 10:30 a.m. The Dow declined 1.4%, and the Nasdaq slipped 1%.

NEW YORK, July 29, 2026, 11:06 a.m. EDT

The S&P 500 slipped 0.7%. The Dow declined by 760 points, and the Nasdaq was down 1%.
Brent rose close to 7% after early EIA data indicated a 7.2-million-barrel drop in crude stocks.
The Federal Reserve will announce its decision at 2 p.m. EDT. Markets currently assign about a 36% chance to a rate hike.

U.S. cash markets traded sharply lower on Wednesday, with the S&P 500 down 0.7% as of 10:30 a.m. The Dow declined 1.4%, and the Nasdaq slipped 1%.

Brent crude climbed 6.8% to reach $89.79 as of 9:35 a.m. EDT. West Texas Intermediate advanced 6.2% to $84.20. The rise was prompted by renewed strikes and concerns over shipping.

Investors are facing dual pressure: rising oil prices are driving up inflation and increasing bond-yield risk. At the same time, positive AI earnings alone are not sufficient anymore.

Market signal	Change
S&P 500	down 0.7%
Dow Jones Industrial Average	down 1.4%
Nasdaq Composite	down 1.0%
Energy Select Sector SPDR Fund NYSEARCA:XLE	up 2.3%
Nvidia NASDAQ:NVDA	down 2.7%
Advanced Micro Devices NASDAQ:AMD	down 5.2%
Micron Technology NASDAQ:MU	down 5.0%
KLA NASDAQ:KLAC	down 8.5%
Apple NASDAQ:AAPL	up 0.2%

Index figures were released at 10:30 a.m. EDT, with individual stocks recorded at about 10:50 a.m. EDT.

The divide was clear. Energy rose by 2.3%, but leading chip stocks declined between 2.7% and 8.5%. Apple posted a modest advance.

SK Hynix KRX:000660 posted its highest-ever quarterly revenue and profit as revenue surged 257%. However, shares slid 9.6% in Seoul trading, as investors expected stronger results.

“The pressure is shifting from spending plans to returns on investment,” said Gina Martin Adams, chief market strategist at HB Wealth. Now, investors are looking for immediate evidence of revenue generated by AI-related capital expenditures. Reuters

KLA reported profits and revenues ahead of expectations, but its shares fell 8.5%. The stock had previously risen almost 150% in the first half. Seagate Technology NASDAQ:STX climbed 1.6% after releasing a forecast above analysts’ estimates.

The physical market was also a factor in the oil rally. Early estimates from the EIA indicated commercial crude stockpiles dropped by 7.2 million barrels. Inventories totaled 404.5 million, roughly 7% lower than the five-year average.

The drop in inventories exceeded expectations by over fivefold compared to the 1.3-million-barrel decrease predicted in a Reuters survey. This is significant as geopolitical tensions had already been pushing prices up. The 10-year Treasury yield increased to 4.63%.

The Federal Reserve’s current target range is 3.50% to 3.75%. The announcement is expected at 2 p.m., with a press conference scheduled for 2:30 p.m. Traders estimate the probability of a 25 basis point hike at about 36%.

Inflation in June cooled to 3.5%, down from May’s 4.2%, while core inflation fell to 2.6%. However, the recent recovery in oil prices threatens to challenge this improving trend.

Microsoft NASDAQ:MSFT and Meta Platforms NASDAQ:META will release earnings after markets close on Wednesday. How much they spend, their profit margins, and revenue from AI will be closely watched for returns. Anticipation is strong.

Market breadth deteriorated further, with decliners leading advancers by a ratio of 1.43-to-1 on the NYSE. On the Nasdaq, the number of new lows surpassed new highs, 81 to 59.

Risks: An unexpected Fed rate hike may intensify pressure on valuations. Any new ceasefire breakthrough could swiftly push oil prices and yields lower. Brent crude has fluctuated between $72 and $102 so far this month.

Negative asymmetry stands out as the central issue for investors. AI companies face penalties even with robust performance. At the same time, reduced oil inventories are raising the required returns for growth stocks.

TS2 TECH • EXTENDED COVERAGE

Further analysis

Editorial insight

Has the Federal Reserve released its interest-rate decision for today?

As of 11:06 a.m. Eastern on Wednesday, no policy decision has been issued. The official announcement is set for 2:00 p.m. Eastern on July 29. Chair Kevin Warsh will hold a press conference thirty minutes following the statement. The federal-funds target range is currently unchanged at 3.50% to 3.75%. The decision to keep rates steady in June was approved unanimously with a 12–0 vote by committee members. Reuters

What result is the market anticipating from today’s meeting?

Traders rated the chance of a quarter-point rate hike today at approximately 36%, suggesting around a 64% chance the policy will remain unchanged. JPMorgan’s market-intelligence desk cited a slightly lower 30% likelihood for a rate increase. In its scenario table, the probability given to a rate cut was just 1%. These differing projections highlight real uncertainty, reflecting a lack of clear market consensus. AP News

What reasons might lead the Fed to maintain current rates even with inflation above its target?

June’s CPI data provides the Federal Reserve with a compelling argument to hold steady. Overall prices slipped 0.4% on the month, pushing annual inflation down to 3.5%. Core CPI remained flat on the month, posting a 2.6% year-over-year increase. The figures show notable improvement, though a single report is not enough to confirm a trend. The June PCE data and second-quarter GDP are both due out Thursday, supporting a wait-and-see approach. Bureau of Labor Statistics

What factors might prompt the Fed to deliver an unexpected rate increase?

The Fed’s favored inflation indicator showed May PCE inflation at 4.1%. Core PCE stood at 3.4%, remaining well above the central bank’s 2% target. Brent crude surged 6% to $87.01 ahead of the policy announcement on Wednesday. The resurgence in energy costs raises the likelihood of another rise in inflation. Dallas Fed President Lorie Logan and Cleveland’s Beth Hammack back tighter monetary policy. While an unexpected rate hike is still a possibility, it is not currently expected. Bureau of Economic Analysis

Is the state of the labor market supportive of maintaining rates or raising them?

U.S. payrolls grew by just 57,000 in June, with unemployment unchanged at 4.2%. Average hourly pay rose 3.5% over the past year. Labor force participation declined by 0.3 percentage point to 61.5%. Sluggish job growth undermines the case for rapid tightening at this stage. However, steady jobless figures and resilient wage gains provide little support for rate cuts. Bureau of Labor Statistics

What are the implications of the Fed’s 2026 projection?

In June, the median estimate for 2026 real GDP growth was set at 2.2%. The same forecast showed unemployment at 4.3% and headline PCE inflation at 3.6%. Core PCE inflation was seen at 3.3%. The median year-end policy rate was 3.8%, above the current midpoint of 3.625%. Among policymakers, nine anticipated a higher rate, eight saw no change, and one expected a lower rate. No new projections are released at today’s meeting. The current distribution points to upside risk for year-end, though projections may shift quickly. Federal Reserve

What is the current positioning for stocks, oil, and bonds ahead of the decision?

At 10:30 a.m. Eastern, the S&P 500 slipped 0.7%. The Dow shed 760 points, or 1.4%, and the Nasdaq declined 1.0%. Brent crude advanced 6% to $87.01 a barrel. The yield on the 10-year Treasury added two basis points to 4.63%. Trading was influenced by oil price shocks and weakness in chip stocks along with lingering Fed uncertainty. AP News

How is the S&P 500 expected to respond to each potential outcome?

JPMorgan assigns a 50% probability to a hawkish hold as its base case, which suggests the S&P 500 could move between +0.25% and −0.50%. A dovish hold has a 28% chance and may boost the index by 0.50% to 1.00%. If there is a quarter-point hike, seen at 20% probability, the index could decline 1.5% to 2.0%. The bank forecasts that losses in the Nasdaq 100 would be greater with a hike. Ahead of the announcement, same-day options pointed to about a 0.8% move. These figures represent scenario projections rather than reliable price targets. Investing.com

What are the projections for rates in September and at year-end?

The upcoming FOMC meeting is set for September 15–16. CME data indicates that the likelihood of a rate hike in September stands between 76% and 80%. A month ago, the same measure pointed to only a 59% chance. Investors anticipate at least one more quarter-point increase by the end of the year. According to the June dot plot, nine policymakers favored hikes, eight saw no change, and one projected a cut. Thursday’s PCE and GDP releases could quickly shift these odds. Federal Reserve

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Mateusz Kaczmarek is a financial and technology journalist at TS2.tech, covering stocks, artificial intelligence, semiconductors and global market developments. A graduate of the Poznań University of Economics and Business, he previously worked in financial analysis before moving into business journalism. His reporting focuses on technology companies, market trends and the forces shaping global investment markets. Follow Mateusz Kaczmarek on Google News.