Dow powers ahead as big tech stabilizes ahead of Micron earnings
12:10pm: More pain for gold
Commodities are under pressure today with both oil and gold sliding sharply, and Chris Beauchamp at IG noting that gold’s run above $4,000 has ended as it posts its biggest pullback in four years.
“The parabolic move of late 2024, through 2025 and on into 2026 has firmly come unstuck,” Beauchamp wrote Wednesday.
“The bigger the party, the bigger the hangover, and gold is still working off its own exuberance. 2022’s selloff took longer, but we have to go back to the distant days of 2013 to find a bigger percentage loss.
“As the dollar keeps strengthening, there is more pain to come for gold.”
11:00am: Markets enter risk reset
Linh Tran, market analyst at XS.com, said the recent pullback in US equities reflects more than routine profit-taking, as investors reassess growth-stock valuations amid persistent macroeconomic headwinds.
According to Tran, elevated Treasury yields, a strong US dollar and the Federal Reserve’s hawkish stance have increased pressure on technology and semiconductor shares, which are particularly sensitive to higher capital costs.
“The fact that some defensive sectors, such as consumer staples, continued to perform positively suggests that capital is not leaving the market altogether, but is instead being reallocated from overheated segments into more stable areas,” Tran said.
Tran noted that the decline still appears to be a short-term correction rather than the start of a broader downturn, as investors rotate into defensive sectors. Looking ahead, Tran said the S&P 500 could face further pressure and potentially test support near 7,200 if weakness in technology stocks persists, though a rebound in megacap tech shares could turn the selloff into a healthy market rebalancing rather than a major trend reversal.
10am: Stocks open slightly higher
US stocks have opened modestly higher, with the S&P 500 up 0.3%, while the Dow Jones and Nasdaq have inched up 0.2% in early trading.
Healthcare and life sciences stocks are topping the S&P, with IQVIA up 6.6%, Charles River Laboratories gaining 5%, followed by Bio-Techne, Danaher and Agilent.
Consumer and travel names were also in demand, led by homebuilding names Builders FirstSource up 8.9%, PulteGroup gaining 7.1%, Lennar rising 6.8% and DR Horton adding 6.6%
The rally in homebuilding was despite weaker-than-expected US new home sales data.
Travel names were also strong, led by Booking Holdings, Expedia, Royal Caribbean, Carnival and Airbnb.
The biggest trend is a tentative stabilisation in mega-cap tech, but the AI supply chain remains under pressure ahead of Micron’s results.
Nvidia, Microsoft, Amazon, Alphabet and Meta were all modestly higher, suggesting investors are buying the broader platform and software winners.
However, Micron fell 1.3%, AMD dropped 1.8%, Intel lost 1.3%, and chip equipment makers Applied Materials and Lam Research were also weaker, indicating lingering concerns around AI spending and semiconductor demand.
Elsewhere, falling oil prices continued to weigh on energy stocks, with Exxon down 1.8%, while banks remained out of favour as JPMorgan slipped 1.1%.
Chevron, IBM, Goldman and soon-to-be-demoted Verizon were the biggest drags on the Dow.
8.05am: Nasdaq tech stocks expected to stabilise
Wall Street stocks are expected to make a steadier start on Wednesday after a sharp technology-led sell-off in the previous two sessions, with investors now focused on Micron’s earnings for clues about the health of the artificial intelligence boom.
Nasdaq and S&P 500 futures were pointing 0.6% and 0.3% higher, although both had pared earlier gains. Futures for the Dow Jones edged 0.15% higher after earlier trading in negative territory.
This potential rebound comes a day after a bruising session, when the Nasdaq plunged 2.2% to 25,587, shedding over 850 points since the start of the week as chipmakers and AI-linked stocks tumbled. The S&P 500 fell 1.4% to 7,365 on Tuesday, while the Dow Jones slipped 0.1% to 51,667.
Of the 22 biggest Nasdaq 100 fallers, around 18 were directly involved in chips, chip manufacturing equipment, semiconductor components or AI hardware, with the ‘Magnificent 7’ tech giants sinking back to their lowest since April, down 3% this year.
The sell-off came despite stronger-than-expected US economic data and easing energy prices. June flash PMI data showed the US economy expanding at its fastest pace in five months.
Energy prices continued to fall on Wednesday, with WTI crude sliding 2.9% to just over $71 a barrel for the first time since March 3 as concerns over disruption in the Strait of Hormuz continue to fade.
The US dollar has climbed to its highest level in more than a year as investors reassess the outlook for US interest rates under new Fed Chair Kevin Warsh, with the dollar index (DXY) breaking above 101.6 level, the highest since March last year.
Gold was also under the microscope, down another 1.7% to levels last seen in November at around $4,050 an ounce.
Market attention is now squarely on Micron, which reports after the closing bell.
Slatestone Wealth chief market strategist Kenny Polcari called it “the most important report of the quarter”, saying investors want proof that AI infrastructure spending remains intact.
Elsewhere, SpaceX confirmed pricing for its first bond offering as a public company after upsizing the deal to $25 billion from its initial target of $20 billion.
Also overnight, it was revealed that Alphabet will replace Verizon in the Dow Jones index.
Investors will also be watching new home sales and building permit data later today for fresh clues on the health of the US housing market.