MPC Markets Morning Call — 30 July 2026: Wall Street Tumbles as Fed Holds, Iran War Reignites and 30-Year Yields Hit 19-Year High

Wall Street ended sharply lower on Wednesday, with the S&P 500 falling 1.52% to 7,316.15 — its lowest level in a month. The Dow Jones Industrial Average shed 2.19% to 51,594.14, and the Nasdaq declined 1.74% to 24,442.94, with the Nasdaq 100 officially entering correction territory at 11% below its June record high. Declining stocks outnumbered risers by a 1.8-to-one ratio on the S&P 500, and volume was relatively heavy at 17.7 billion shares traded.

The semiconductor sector bore the brunt of the selling, with the Philadelphia SE semiconductor index plunging 5.3% to a three-month low — now down nearly 30% from its June 22 peak and on track for its worst month since the early 2000s. SK Hynix fell 10% after a sixfold jump in quarterly profit fell short of lofty investor expectations, triggering South Korea’s market-wide circuit breaker for a second straight day. The Kospi has now plunged 40% from its June peak, with authorities announcing emergency measures to curb retail access to leveraged single-stock ETFs. AI infrastructure company Vertiv slumped 17% after missing quarterly revenue expectations, while Qualcomm fell 5% on weak fourth-quarter guidance and Arm declined 3% in after-hours trading.

South Korea’s equity market triggered circuit breakers for a second consecutive day as the chip selloff deepened. Source: Bloomberg

After the bell, earnings diverged sharply. Meta Platforms tumbled 8% after reporting EPS of $6.18 versus consensus of $7.17, weighed down by $2.4 billion in legal charges and $31 billion in quarterly capex. The company narrowed its full-year capex forecast higher to $130–$145 billion and gave a third-quarter revenue outlook of $61–$64 billion, with the midpoint below estimates. Microsoft climbed 4% in extended trade after Azure cloud revenue surged 43% year-over-year, beating estimates of 39.98%, with EPS of $4.74 topping the $4.24 consensus on total revenue of $90 billion. Elsewhere, Starbucks jumped 11% on a turnaround beat, Lam Research rose 7% on a strong guide, and Fortinet surged 10%, while Carvana plummeted 14% and Teladoc cratered 24%.

Global Stock Indices — 29 July 2026. Broad selling across major benchmarks, with South Korea’s Kospi the standout decliner.

The Philadelphia SE semiconductor index has fallen nearly 30% from its June 22 peak, on track for its worst month since the early 2000s.

The Federal Open Market Committee voted 9–3 to hold the benchmark federal funds rate in a range of 3.50%–3.75%, marking the fifth consecutive hold. Dallas Fed President Lorie Logan, Cleveland’s Beth Hammack and Minneapolis Fed chief Neel Kashkari dissented in favour of a quarter-point hike. The fractured vote — in what Goldman Sachs had described as the most uncertain policy meeting in almost 30 years — signalled growing conviction among some policymakers that rates need to rise further to curb resurgent inflation.

Chairman Kevin Warsh used his press conference to push back firmly against any perception of a higher implicit target. “For some households, businesses and market professionals, five years of high inflation have left a mistaken impression that the Fed’s implicit inflation target was somehow above 2%,” he said. “Let me reiterate: there is no soft inflation target.” Warsh added that if inflation continues to run elevated through the forecast period, “interest rates could well be part of that solution.” Markets now price a 64% chance of a September hike, down from 81% before the statement.

The bond market’s reaction was emphatic. The yield curve bear-steepened sharply, with the 30-year leaping 12 basis points above 5.2% to its highest level since 2007. The 10-year climbed 7 basis points to 4.68%, while the 2-year dipped slightly to 4.31%. Apollo’s Torsten Slok said the Fed’s abandonment of guidance is fuelling historic bond market volatility, with Treasury yields “swinging up and down like a yo-yo.” Neil Dutta at Renaissance Macro said Warsh “squandered some credibility” by holding rather than hiking.

The diplomatic lull in the US–Iran war collapsed on Wednesday after Iran’s Islamic Revolutionary Guard Corps launched a surprise missile attack on US forces based in the Middle East. US Central Command confirmed all incoming missiles were “successfully intercepted,” while Trump told Fox News the US would respond by “hitting them hard,” adding in characteristically blunt language that Iran is “going to get a beating.” The rapid escalation came just days after the two sides had paused tit-for-tat strikes at the end of last week to allow time for diplomacy.

Separately, the US and Saudi Arabia conducted joint “precision strikes” in Iraq against Iran-backed proxies that had been targeting US forces and Saudi energy infrastructure. Iraq’s Popular Mobilization Forces said the strikes killed 20 people, including four IRGC members. Tehran rejected the accusations, warning that “attributing every action against US interests in the region to the Islamic Republic of Iran is a major miscalculation.” Meanwhile, fires broke out aboard two LNG vessels at Egypt’s Damietta port on the Mediterranean after drone strikes, though the blazes were brought under control with no injuries.

The Strait of Hormuz remains effectively shut, with hardly any ships transiting with transponders on. Iran’s IRGC claimed to have “struck and brought to a halt” three tankers moving along what it called an “unsafe and illegal route.” Talks between Iran and Oman to reopen the waterway have stalled after Iran rejected an Omani proposal for shared control, insisting on sole authority over vessels entering the Persian Gulf. The Houthi blockade of Saudi ports and attacks in the Red Sea add a second chokepoint to the supply picture.

Oil prices surged on Wednesday, snapping a steep three-day slide. Brent crude futures climbed roughly 7–8% to settle near $87.84–$91 a barrel across sources, while WTI gained 6.5–6.9% to around $84.73–$87.82. The rally was driven by the resumption of US–Iran hostilities and underpinned by reports that OPEC+ is considering pausing further production increases for three months from October. US commercial crude oil inventories fell 7.2 million barrels in the week of July 24, a sharp unexpected draw versus expectations of a 0.7 million barrel build. SPR stocks fell to 307.7 million barrels — the lowest since March 1983 — as the Trump administration continues releasing 172 million barrels over four months to cap prices. Cushing, Oklahoma stocks scraped tank bottoms at 18.6 million barrels.

Gold rallied sharply after the Fed decision, with spot gold climbing 1.9% to $4,101.99 an ounce, touching an intraday high of $4,116.26. Silver rose 3.2% to $58.96, platinum added 1.9% to $1,636.10, and palladium firmed 1% to $1,281.75. Metals trader Tai Wong noted the rally felt like “a relief rally after the Fed held rates steady,” adding that “the long end of the bond market is panicking and dragging stocks lower — the fear of inflation is helping gold outperform.”

In currencies, the Bloomberg Dollar Spot Index fell 0.3% after the Fed decision. The euro rose 0.6% to $1.1450, the pound gained 0.4% to $1.3345, and the yen strengthened 0.2% to ¥163.54. The Norwegian krone jumped again on the oil surge. In bonds, the UK 10-year gilt yield climbed 9 basis points to 5.04%, with long-dated gilts near their highest levels since the 1990s as fiscal worries run strong. Germany’s 10-year Bund yield rose 6 basis points to 3.16%.

Commodities, Energy & FX — 29 July 2026. Oil surged 7–8% on Iran escalation; gold rallied as the dollar fell post-Fed.

Australian shares are set to open lower on Thursday after the late-session rout on Wall Street, with S&P/ASX 200 futures falling 51 points or 0.6% to 8,945, reversing an earlier gain of more than 30 points. The combination of surging bond yields, a hawkish Fed split and renewed Middle East escalation presents a challenging backdrop for risk assets. Wall Street veteran Jim Bianco summed up sentiment: “Bond traders will stop panicking when the Fed starts panicking. The Fed did not panic today.”