Wall Street ended sharply divided on Tuesday. The S&P 500 added 0.3% to close at 7,431.43, with its equal-weighted version hitting a record high, stripping out the market-cap bias that has masked the tech selloff. The Dow Jones Industrial Average advanced 1% to 52,747.53, boosted by an 8.3% surge in Sherwin-Williams after it raised full-year profit guidance and announced an 8% price increase across product lines, and a 5% jump in Coca-Cola after FIFA World Cup sponsorship drove 5% quarterly volume growth. Boeing gained 4.8% after generating $0.6 billion in positive free cash flow. The Nasdaq Composite, however, shed 0.2% to close at 24,876.91, having earlier declined as much as 1.4%.

Semiconductor stocks bore the brunt. The Philadelphia Semiconductor Index dropped 4.5%, with memory and storage names leading losses — Sandisk, Western Digital, Seagate, Micron, Lam Research and Arm all ended among the top percentage losers on the Nasdaq. The S&P 500 Technology sector fell 1.2%. Competition from China emerged as the primary drag, sparked by the success of Moonshot AI’s Kimi K3 model, the blockbuster Shanghai debut of memory chipmaker CXMT (up nearly 470% on its first day), and progress in domestic production of immersion deep ultraviolet lithography machines. Apple was a bright spot, climbing 0.9% and briefly topping $5 trillion in market capitalisation for the first time.

“Flows are rotating more broadly into the balance of the S&P 500 with Consumer Staples and Health Care leading the rally. The continued selloff in oil is helping to underpin the equity market more broadly at the S&P 500 index level,” said Michael O’Rourke, chief market strategist at Jones Trading. Deutsche Bank analysts noted that nearly 90% of companies reporting have beaten expectations so far this season, with aggregate earnings running 10% above consensus and S&P 500 Q2 earnings growth tracking at 34% year-over-year — well above the 26% consensus bar.

Global Stock Indices — 28 July 2026. The Dow leads major markets higher, while the Nasdaq and Asian chip-heavy indices lag.

Nvidia’s five-year credit default swap surged to a record 82 basis points on Monday — its largest single-day intraday gain since the contract began actively trading — after Bloomberg reported the chipmaker is working on AI infrastructure deals potentially worth more than $750 billion in total. The deals include a $250 billion financing guarantee to help OpenAI lease capacity from a planned Ohio data centre and a separate arrangement to help finance $350 billion of OpenAI chip purchases. Nvidia shares fell 5% to $196.51, stripping roughly $250 billion from its market capitalisation and ceding the title of world’s most valuable company to Apple.

The anxiety centres on what credit analysts are calling “circular financing” — Nvidia takes equity stakes in or provides debt guarantees to customers such as OpenAI and CoreWeave, which then use the capital to purchase Nvidia’s own chips, potentially inflating apparent demand. Bloomberg reported that Nvidia has already announced more than $540 billion of such deals in 2026 alone. Both the IMF and the Bank for International Settlements have flagged AI circular financing as a systemic downside risk. S&P Global recently downgraded Oracle to BBB–, its lowest investment-grade rating, and Alphabet reported negative free cash flow for the first time since its IPO amid the AI buildout.

The BIS published a bulletin on Tuesday warning that AI spending — increasingly financed by debt — is driving up economic activity and fuelling equity gains, all of which add to near-term inflationary pressures, while the eventual productivity benefits remain highly uncertain. “By simultaneously affecting demand and supply, AI blurs cyclical signals,” the BIS said. Margin debt hit a record $1.5 trillion in June according to FINRA, leaving investors’ net balance with their brokers in a $1 trillion deficit for the first time.

Market Warning Signals: AI hyperscaler bond yields climbing faster than Treasuries as semiconductor rally falters. Source: Reuters

Margin debt hit a record $1.5 trillion in June, leaving investors in a $1 trillion net deficit with their brokers for the first time. Source: Reuters/FINRA

Oil prices slumped again on Tuesday, extending their sharp losses from the prior session. West Texas Intermediate crude fell 4.2% to $79.15 a barrel, while Brent dropped over 4% to around $86 per barrel as the US and Iran maintained a pause in hostilities. President Trump told reporters the US was holding “good talks” with Iran and that there was a chance of reaching an agreement, although he warned strikes would resume if diplomacy failed. On Tuesday, Trump again threatened to attack Iran’s bridges and power plants if Tehran did not make a deal. Despite the retreat, oil remains up 27% on an annual basis in dollar terms, punishing non-US consumers — euro zone and UK importers are paying nearly 30% more than a year ago.

Spot gold fell 1.3% to $4,023.66 an ounce as the risk-off bid faded. US 10-year Treasury yields declined 5 basis points to 4.60%, while 30-year yields have remained above 5% for the longest stretch since the early days of the financial crisis in 2007. The euro rose 0.2% to $1.1388 and the British pound was steady at $1.3288. The yen traded at nearly 164 per dollar, sitting at four-decade lows with investors on edge for potential Japanese intervention. Reports that the Bank of Japan is considering a faster pace of rate hikes have done little to support the currency. Bitcoin fell 1.6% to $63,857.82.

“The oil impact of the conflict on headline energy inflation is straightforward and supports the view that the consumer price index may have peaked in May if oil prices do not break to new highs,” said Angelo Kourkafas at Edward Jones. Raymond James CIO Larry Adam noted that spreads on some of the riskiest corporate bonds had reached a 15-month high, suggesting markets are demanding more compensation to lend to weaker borrowers.

Commodities, Energy & FX — 28 July 2026. Oil prices extend their sharp retreat, dragging energy-linked currencies lower.

Chart of the Day: Another rout in global chip stocks unfolds ahead of megacap earnings, with growing unease at the cash burn of AI hyperscalers. Source: Reuters

The chip selloff hit Asia hard. South Korea’s KOSPI plunged more than 10% on Tuesday — its biggest daily loss in nearly five months — as Samsung Electronics and SK Hynix closed 13.4% and 14.7% lower respectively. Japan’s Nikkei 225 shed 4%, with memory chipmaker Kioxia sinking 18.3%. The weakness followed Nvidia’s 5% decline on Wall Street and was compounded by growing concerns over China’s advancing chip capabilities.

A powerful 7.1-magnitude earthquake struck Japan’s southwestern island of Kyushu on Tuesday, killing at least one person, injuring dozens and damaging buildings including a shopping mall in Kumamoto Prefecture where several people were feared trapped after an explosion. Two people were presumed dead at a Nippon Paper Industries plant in Yatsushiro. TSMC evacuated staff at its Japan Advanced Semiconductor Manufacturing facility and later confirmed building safety. Sony Semiconductor Solutions evacuated employees at its Kikuyo plant, while Tokyo Electron suspended operations at its Koshi and Ozu facilities for safety inspections. More than 42,000 households in Kumamoto lost electricity.

Aftermath of the 7.1-magnitude earthquake in Kumamoto Prefecture, Japan. Source: Bloomberg

Australian shares are poised to open higher, bolstered by broad gains in New York as oil extended its retreat on optimism that the US and Iran are making progress toward a revived peace accord. ASX 200 futures rose 74 points or 0.8% to 8,980. The session’s defining event is the June quarter CPI release at 11:30am AEST, with consensus expecting annual headline inflation to accelerate to around 4.4%, up from 4.1% in Q1.

NAB forecasts quarterly trimmed mean of 0.9% quarter-over-quarter and 3.7% year-over-year — in line with consensus and a tenth below the RBA’s May Statement on Monetary Policy forecast. eToro’s Josh Gilbert flagged that trimmed mean inflation hit 3.6% in May — the highest since late 2024 — signalling that price pressures are “digging in across the economy, not just riding on the back of higher energy costs.” Rio Tinto’s half-year results are due at about 8:30am AEST.