Stock Market Recap: July 28, 2026 — Dow Rallies as Chip Stocks Tumble on China AI Fears

U.S. equity markets closed Tuesday in a divided fashion as a deepening rout in semiconductor and AI-related stocks battered the Nasdaq, while a strong wave of corporate earnings — especially from Coca-Cola and Sherwin-Williams — lifted the Dow Jones Industrial Average to a one-and-a-half-week high. A weaker-than-expected consumer confidence report added to the cautious mood, even as falling oil prices cushioned broader losses. With the Federal Reserve's two-day FOMC meeting now underway, investors are keeping a close eye on Wednesday's policy statement.

Market Performance: Dow Rallies While Nasdaq Falls Toward Correction

The Dow Jones Industrial Average (DJIA) climbed approximately 0.5%, or 262 points, closing around 52,210, driven by outsized gains in consumer staples and defensive names. The S&P 500 essentially finished flat, edging up just 0.02% to close near 7,413, as gains in consumer discretionary, consumer staples, and communication services offset declines in technology, energy, and utilities. The Nasdaq Composite fell roughly 0.2% to close around 24,932, briefly flirting with correction territory — defined as a 10% decline from a recent high — before paring its losses. The Philadelphia Semiconductor Index (SOX) is tracking its worst monthly performance since October 2008, down nearly 19% in July.

Treasury yields moved lower on Tuesday as investors rotated into bonds amid the risk-off mood in equities. The 10-year Treasury yield hovered near 4.55%. Crude oil futures fell more than 5%, with WTI crude dropping to around $78 per barrel after President Trump indicated peace talks with Iran were showing promise, though he warned attacks could resume if negotiations broke down. Gold futures declined approximately 1.1%, trading near $4,030 an ounce. Bitcoin traded near $63,400. The U.S. Dollar Index (DXY) held near flat at around 101.56.

Top Story: Chip Rout Deepens on China Competition and AI Spending Fears

The dominant story of the session was the accelerating selloff in semiconductor stocks, driven by two interconnected developments. First, ChangXin Memory Technologies (CXMT) — China's leading memory chipmaker — debuted on the Shanghai Stock Exchange on Monday with a gain of nearly 470%, raising over $8.6 billion in Asia's largest IPO of 2026. The listing intensified fears that rising Chinese competition could weigh on global memory chip prices and threaten revenues at rivals like Micron Technology (MU), SK Hynix, and Samsung Electronics.

Second, The Information reported that a Chinese state-backed company had begun mass-producing immersion deep ultraviolet (DUV) lithography machines — technology long dominated by Dutch semiconductor equipment maker ASML Holding (ASML). This raised fresh questions about the durability of Western export control advantages and sent ASML shares down more than 3%.

On top of those concerns, Nvidia (NVDA) was reportedly in discussions to backstop approximately $250 billion in financing for OpenAI as part of a major data center project — following Friday's $500 billion-plus strategic collaboration announcement with South Korea's SK Group. These partnerships highlighted the vast scale of AI ambition but deepened investor worries about what analysts have called circular funding in AI infrastructure. Nvidia fell nearly 5% and briefly lost its title as the world's most valuable publicly traded company to Apple (AAPL).

The global chip selloff spilled across borders. South Korea's KOSPI index plunged more than 10%, at one point triggering a circuit-breaker trading halt, marking its worst session in five months. Japan's Nikkei 225 and Taiwan's Taiex each fell approximately 4%.

FOMC Meeting Begins: Fed Expected to Hold Rates Steady Wednesday

The Federal Open Market Committee kicked off its July 28-29 meeting on Tuesday, with the policy decision expected Wednesday at 2:00 p.m. ET, followed by a press conference with Fed Chair Kevin Warsh at 2:30 p.m. ET. Economists widely expect the FOMC to hold the federal funds rate at 3.50%-3.75%, which would mark the fifth consecutive pause since the Fed cut rates in December 2025.

Warsh has struck a hawkish tone publicly, telling Congress the committee has no tolerance for persistently elevated inflation. However, most analysts expect him to stand pat for now given June's CPI reading of 3.5% annually and the uncertainty created by the U.S.-Iran conflict's effect on energy prices. Per the CME FedWatch Tool, approximately 62% of market participants expected no change at the July meeting. Markets are pricing roughly a 40% probability of at least one rate hike before year-end.

Biggest Movers

Coca-Cola (KO) — Up ~6%

Coca-Cola delivered a strong Q2 2026 earnings beat and raised its full-year guidance. Revenue grew 7% to $13.38 billion, global unit case volume rose 5%, and comparable EPS came in at $0.97, up 11% year-over-year. The company raised its full-year comparable EPS growth guidance to +9% to +10% from a prior range of +8% to +9%. CEO Henrique Braun cited the strength of Coca-Cola's consumer franchise. Shares surged more than 6%.

Sherwin-Williams (SHW) — Up ~8%

Sherwin-Williams reported Q2 2026 adjusted EPS of $3.70, ahead of the $3.51 consensus. The company raised its full-year adjusted EPS guidance to $11.80-$12.20, above the prior range. CEO Heidi Petz cited strong first-half execution. Sherwin-Williams was the top gainer in the Dow on the day, rising more than 8%.

Corning (GLW) — Down ~16%

Corning reported Q2 2026 core EPS of $0.78, beating the $0.75 estimate, and grew core revenue 17% to $4.74 billion. However, GAAP revenue of $4.51 billion missed estimates of $4.65 billion by 3%, and Q3 revenue guidance of approximately $4.95 billion came in below the $5.04 billion consensus. Shares plunged approximately 16%, dragging down other optical networking stocks.

Micron Technology (MU) — Down ~9%

Micron shares fell approximately 9%, caught in the CXMT-driven selloff. Investors fear that China's rapid memory chipmaker expansion could pressure DRAM and NAND flash pricing globally.

Boeing (BA) — Narrowing Losses

Boeing reported Q2 2026 net loss attributable to shareholders of $444 million, improving from a $611 million loss in Q2 2025. Operating margin recovered to 0.6% from negative territory and operating cash flow surged more than 500%. The company continues its gradual recovery from prior manufacturing and safety challenges.

UPS (UPS) — Beats and Raises Guidance

UPS posted Q2 2026 revenues of $22.8 billion. Non-GAAP adjusted EPS came in at $1.76, beating the consensus of $1.66. The company raised its full-year 2026 revenue guidance to approximately $91.2 billion and full-year adjusted diluted EPS guidance to approximately $7.22.

Economic Data: Consumer Confidence Misses for Third Straight Month

The Conference Board's Consumer Confidence Index fell 1.4 points to 90.8 in July, missing the consensus estimate of 92.3 and marking the third consecutive monthly decline. The Present Situation Index dropped 3.6 points to 114.9. The Expectations Index held at 74.7, remaining below the 80-point threshold historically associated with elevated recession risk — a streak now 18 months long. Chief Economist Dana M. Peterson cited softening views of business conditions and Middle East conflict as influencing consumer sentiment.

Tomorrow's Market Calendar: July 29, 2026

• Federal Reserve FOMC Decision (2:00 p.m. ET) — Rate decision and statement; press conference with Fed Chair Warsh at 2:30 p.m. ET.
• Microsoft (MSFT) — Q4 FY2026 earnings, after market close. Azure cloud growth and AI spending guidance in focus.
• Meta Platforms (META) — Q2 2026 earnings, after market close. Advertising revenue and AI investment outlook closely watched.
• Robinhood (HOOD) — Q2 2026 earnings, after market close.
• NXP Semiconductors (NXPI) — Q2 2026 earnings, after market close.
• Ford Motor Company (F) — Q2 2026 earnings, after market close.

Apple (AAPL) and Amazon (AMZN) are scheduled to report on Thursday, July 30.

Conclusion: Rotation Signals as AI Trade Faces Its Toughest Test of 2026

Tuesday's session crystallized a theme that has been building for weeks: investors are rotating away from richly valued AI and semiconductor names toward companies with durable, tangible earnings power. The Dow's rally alongside the Nasdaq's near-correction decline is a classic rotation signal. China's rapidly advancing chip industry — validated by both the CXMT IPO and domestic DUV machine production reports — poses real long-term challenges to the AI infrastructure thesis that has powered markets in 2026.

Wednesday will be pivotal. The Fed's policy statement could reassure or alarm markets depending on Warsh's tone regarding inflation and the rate outlook. Microsoft and Meta's guidance on AI capital expenditure and revenue payoffs will be equally critical. Investors should watch Treasury yields, oil prices, and big-tech AI guidance as the key variables heading into the second half of earnings season.