While global markets posted significant gains this week, the Nasdaq and S&P 500 emerged as the only major indices declining despite the broader market rally. According to latest market data, the Nasdaq Composite fell 1.15% to 26,376.34 points, while the S&P 500 slid 0.57% to 7,511.35 points. In contrast, the Dow Jones Industrial Average rose 0.64% to 51,999.67 points, marking its second straight record close. The divergence highlights investor caution as hopes faded for a swift reopening of the Strait of Hormuz and focus turned to the Federal Reserve's policy meeting. Mark Luschini, chief investment strategist at Janney Montgomery Scott, noted that "we're just digesting some of those gains and the setup in anticipation of the Fed meeting is always a little tentative."
Wall Street stocks were mixed on Tuesday as hopes faded for a swift reopening of the Strait of Hormuz and focus turned to the Federal Reserve's policy meeting. Although US officials have said the deal will reopen the Strait of Hormuz to commercial traffic without tolls by Friday, investors weighed warnings that reopening the Strait could be difficult, and it could take months for oil shipments to ramp up. US diplomacy with Iran creates a complicated backdrop to the Fed meeting, with recent inflation reports running hot amid the war as energy prices have surged. The Fed's counterpart, the Bank of Japan, on Tuesday raised its benchmark interest rate to a 31-year high to counter those price pressures. Fed officials began their June meeting on Tuesday, ahead of Wednesday's closely watched rate decision - the first under President Trump-backed Chair Kevin Warsh.
A significant capital rotation away from technology stocks is contributing to the decline in major US indices. According to market analysis, when the peace deal was announced, the biggest beneficiaries were European industrials, Japanese exporters, and energy-dependent sectors. The STOXX 600 hit an all-time high, while Japan's Nikkei surged nearly 5% and crossed 70,000 for the first time. This rotation drew money from richly valued US tech positions that had held up relatively well during the Iran conflict. Of the S&P 500's 11 major industry sectors, seven ended higher, with financials (up 1.5%) and industrials (up 0.7%) as the leading gainers. Technology (down 2.3%) was the biggest laggard, with chip stocks falling sharply after soaring in the prior three sessions. The Philadelphia Semiconductor Index underperformed massively with a 5.7% drop, while U.S. oil futures settled down 5.8% as details emerged about the U.S.-Iran interim deal.
SpaceX (SPCX) shares jumped further, pointing to a third day of post-IPO gains, with the Elon Musk-led company trading within striking distance of Amazon (AMZN) in market value during the session. SpaceX surged nearly from its IPO price of $135 to a high of nearly $225.64 and briefly overtook Amazon, with the newly listed stock's strong performance attracting significant attention and drawing capital away from existing Nasdaq positions. SpaceX finished up 4.8% at $201.80, after hitting a record high of $225.64, with the rocket and AI company ending the session with a market value above that of Amazon and briefly surpassing Microsoft's value in morning trading. SpaceX's market capitalization briefly surpassed Microsoft to rank fourth in the US, with the company closing up 4.8% at $201.80 and maintaining a market capitalization of $2.66 trillion.
The technology sector experienced broad-based selling pressure with the Philadelphia Semiconductor Index closing down 5.71% at 13,294.22 points, with all 30 components falling. Chip stocks fell across the board, with Intel down 8.45%, Advanced Micro Devices down 7.30%, Arm Holdings down 3.93%, Qualcomm down 3.05%, and Nvidia down 2.37%. Among mega-cap tech stocks, Broadcom fell 4.37%, Tesla fell 1.58%, Microsoft fell 1.48%, and Amazon fell 0.01%. The semiconductor sector's decline reflects investor concerns about higher interest rates creating headwinds for growth-oriented technology stocks, particularly those with expensive valuations. U.S. oil futures settled down 5.8% as some details emerged about the U.S.-Iran interim deal, which is expected to extend a tenuous ceasefire announced in April by another 60 days and reopen the Strait of Hormuz.
