Tuesday’s market session closed with mixed results, raising questions about the divergence between major indices. While the Nasdaq came under pressure due to a sharp sell-off in tech and semiconductor stocks, broader market resilience was supported by falling Treasury yields and strong earnings from sectors like construction and defense.
Tech Weakness Drags Nasdaq Down
Leading the decline in the Nasdaq 100 were names like KLA Corp, Lam Research, Nvidia, Micron, and Broadcom, all falling between 3% and 4% or more. This renewed weakness in semiconductors highlights ongoing investor concerns about demand. Adding to the negative sentiment, industrial giants disappointed — Lockheed Martin plunged over 10% on weaker-than-expected sales, and General Motors sank more than 7% after cutting its full-year profit forecast.
The Bulls Aren’t Backing Down
But it’s not all doom and gloom. Homebuilder DR Horton soared 16%, setting off a rally in the housing sector with PulteGroup, Lennar, and Toll Brothers climbing 8% to 11%. Strong Q3 sales and raised full-year revenue guidance were key drivers.
Northrop Grumman also surged 9% after raising its earnings outlook, while IQVIA Holdings and Quest Diagnostics posted solid results that beat expectations. Genuine Parts and PACCAR followed suit, suggesting a rotation into “old economy” sectors while tech cools off.
Bonds Offer Breathing Room
A notable drop in 10-year Treasury yields — down to 4.33% — offered a cushion to equity markets. The decline followed weak regional data (Richmond Fed’s manufacturing index dropped to an 11-month low of -20) and dovish comments from Treasury Secretary Bessent, who expressed support for Fed Chair Powell and optimism over U.S.-China trade negotiations. These factors helped ease rate hike concerns, giving stocks room to recover.
Trade Tensions and Macro Data in Focus
Trade war rhetoric re-emerged as former President Trump announced upcoming tariffs on goods from the EU, Canada, and Mexico — echoing themes that spooked markets in years past. Meanwhile, investors are watching closely for key economic data this week: housing sales, jobless claims, and business activity indexes — all of which could add volatility.
Earnings Season Picks Up Steam
This week brings results from major players like Alphabet and Tesla. Roughly 20% of S&P 500 companies are expected to report, and so far, Q2 earnings growth is tracking at 3.2% — slightly above pre-season expectations. However, only six of the S&P 500’s eleven sectors are projected to post earnings growth, the lowest number since Q1 2023 — a red flag for the bulls.
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