Dow rises as S&P 500 edges higher, chip stocks remain under pressure

The Dow Jones Industrial Average and the S&P 500 ended higher on Monday, while the Nasdaq Composite closed lower as weakness in semiconductor stocks offset gains in other sectors ahead of a pivotal week for corporate earnings, inflation data and the Federal Reserve's interest rate decision.

The Dow gained 262.83 points, or 0.51%, to close at 52,210.08.

The S&P 500 edged up 0.02% to 7,413.18, while the Nasdaq Composite slipped 0.18% to 24,932.08.

Investors remained focused on upcoming quarterly results from Microsoft, Amazon, Meta Platforms and Apple, which are expected to provide fresh insight into artificial intelligence spending after recent earnings from Alphabet and Tesla raised concerns about the pace of capital investment.

Markets also looked ahead to Wednesday's Federal Reserve policy decision, with investors weighing the possibility that policymakers could maintain higher interest rates for longer amid inflation concerns.

Chip stocks extend decline as China developments weigh

Semiconductor stocks remained under pressure, although they recovered from their session lows after a volatile trading session.

The VanEck Semiconductor ETF (SMH) extended its recent decline, while Advanced Micro Devices fell about 5%, Teradyne dropped 4%, and Micron Technology lost roughly 2%. US-listed shares of ASML also declined nearly 6%.

Chipmakers initially advanced after Chinese memory-chip manufacturer ChangXin Memory Technologies (CXMT) made a blockbuster debut on the Shanghai Stock Exchange.

However, sentiment weakened following reports that China has begun developing domestic deep ultraviolet (DUV) lithography machines used in semiconductor manufacturing, raising concerns about intensifying competition for US chipmakers.

The semiconductor sector also continued to face pressure as investors reassessed artificial intelligence-related investments following recent earnings reports that highlighted rising AI spending.

Despite the recent selloff, the Philadelphia Semiconductor Index remains up about 63% in 2026, although it has fallen roughly 20% from its record high reached in late June.

Outside technology, consumer staples and healthcare were among the strongest-performing sectors during the session as investors rotated into more defensive areas of the market.

Oil slides as Fed, earnings remain in focus

Oil prices fell sharply after the United States paused its military campaign against Iran and President Donald Trump said Washington was holding talks with Tehran, easing immediate concerns about supply disruptions.

Brent crude futures settled down 8.7% at $88.36 a barrel, while West Texas Intermediate crude fell 7.5% to $82.61, both reaching their lowest levels in more than a week.

The decline in oil prices weighed on energy stocks, with Occidental Petroleum and Exxon Mobil both closing lower.

Attention now shifts to the Federal Reserve's policy announcement on Wednesday.

According to the CME FedWatch Tool, traders currently assign a 62% probability that the central bank will leave interest rates unchanged this week, while also pricing in a meaningful possibility of a rate increase.

Investors will also monitor the release of the June Personal Consumption Expenditures Price Index on Thursday, the Fed's preferred measure of inflation, for additional clues on the interest-rate outlook.

Meanwhile, analysts expect S&P 500 companies to report aggregate second-quarter earnings growth of about 39% from a year earlier, with AI-related companies expected to account for a significant share of that expansion.

The upcoming earnings from the largest technology companies are likely to shape investor sentiment toward AI spending and broader equity markets in the weeks ahead.