Chip Stocks Rise While Broader Market Falls Ahead of Retail Earnings Week

TLDR

• The Dow fell 0.3% and the S&P 500 slipped 0.1% on Monday, while the Nasdaq edged slightly higher
• Over 350 S&P 500 stocks declined even as the index hovered near breakeven, with tech the only rising sector
• Chip stocks led gains, with the iShares Semiconductor ETF rising 2.7%
• Major retailers including Walmart, Target, Home Depot, and Lowe’s report earnings this week
• Traders cut odds of a September Fed rate hike to below one-third as economic data stays mixed

US stocks opened Monday on uneven footing, with the major indexes pointing in different directions as Wall Street digested a busy week ahead of retail earnings.

The Dow Jones Industrial Average dropped around 165 points, or 0.3%, at the open. The S&P 500 slipped 0.1%, coming off its third straight weekly gain. The Nasdaq Composite edged up 0.2%, led by strength in chip stocks.

The Market Is Weaker Than the Headlines Suggest

The surface-level numbers are hiding a broader pullback. More than 350 of the S&P 500’s stocks were in the red on Monday, even as the index itself hovered near flat.

The Invesco S&P 500 Equal Weight ETF, which treats every stock equally, fell 0.6%. That gap between the headline index and the equal-weight version shows how top-heavy the gains have been.

Tech was the only S&P 500 sector rising on the day. The iShares Semiconductor ETF jumped 2.7%, while ETFs tracking software stocks and the Magnificent Seven were both lower.

Wall Street appears to be rotating back into AI-related names during this lull. The rest of the market is not keeping pace.

Retail Earnings and Fed Policy in Focus

Investor attention this week is on retail earnings. Walmart, Target, Home Depot, and Lowe’s are all set to report quarterly results. The numbers will give a clearer picture of consumer spending during the back-to-school season.

Traders also pulled back their expectations for a September rate hike at the Fed’s Jackson Hole meeting. Odds dropped to less than one-third, as recent inflation and jobs data have sent mixed signals.

The Federal Open Market Committee meeting minutes are due Wednesday. Those could offer more detail on where Fed officials stand on future rate decisions.

Oil prices are also in the mix. Brent crude futures edged up to $88 per barrel on Monday as the US continues to factor energy into its approach to the Middle East conflict.

Treasury yields continued to climb. Both the 10-year and 30-year yields extended recent gains, driven by concerns about growing national debt.

The S&P 500 came into Monday fresh off its third consecutive weekly gain. But Monday’s session suggests that momentum may be fading outside of a narrow group of tech and chip names.

With no major economic data releases scheduled until the Fed minutes on Wednesday, earnings from big-box retailers are likely to set the tone for markets this week.

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