The Dow Jones Industrial Average extended its winning streak to a second consecutive record close on Tuesday, finishing at 51,999.67, a gain of 328.64 points or 0.64%. However, the broader market faced headwinds as the S&P 500 fell 42.94 points (0.57%) to 7,511.35 and the Nasdaq Composite dropped 307.60 points (1.15%) to 26,376.34, pressured by a sharp selloff in technology shares.
The Philadelphia semiconductor index plunged 5.7%, reflecting deep losses in chipmakers. Nvidia edged up 0.04% in after-hours trading, while Broadcom rose 0.21% and Micron climbed 1.46%. Apple eased 0.15% and Tesla dropped 0.38% in late trading. Major index-tracking funds saw only modest gains after the close: SPY added 0.04%, QQQ rose 0.03%, and DIA gained 0.10%, according to Investing.com.
Market participants are bracing for the Federal Reserve's interest rate decision on Wednesday, with lingering inflation concerns and a complex macroeconomic backdrop. Oil prices slid sharply, with Brent crude falling 5.1% to $78.96 a barrel and U.S. West Texas Intermediate dropping 5.8% to $76.05, both hitting their lowest levels since early March. Reports of a potential U.S.-Iran deal to reopen the Strait of Hormuz and allow Iranian oil exports contributed to the decline, offering some relief to equity markets.
"We're just digesting some of those gains," said Mark Luschini, chief investment strategist at Janney Montgomery Scott, referring to Monday's rally. He described the mood before the Fed meeting as "a little tentative." The CME FedWatch tool indicated about a 42% probability of a quarter-point rate hike by December, while UBS Global Wealth Management pushed its forecast for Fed rate cuts out to 2027, expecting a more hawkish tone from the central bank.
Economic data added to the cautious tone. U.S. single-family housing starts slipped 1.9% in May, and total housing starts plunged 15.4% to a six-year low. Import prices rose 1.9% for the month. "There is little indication that home building will pick up any time soon," said Sal Guatieri, senior economist at BMO Capital Markets.
In corporate news, SpaceX shares surged 4.8% to a record $201.80, pushing its market capitalization above Amazon's and briefly surpassing Microsoft's during the session. The company's ascent underscores the growing influence of space and AI-related names in the U.S. equity landscape.
Despite the tech-led decline, some strategists remain bullish. Wells Fargo raised its year-end 2026 S&P 500 target to 7,950 from 7,300, citing improved earnings, reduced macroeconomic risks following a potential Iran deal, and a sentiment shift after the recent pullback.
With trading volumes thinning ahead of the Juneteenth holiday on Friday, when NYSE and Nasdaq will be closed, volatility could increase. Analysts warn that any setback in Iran deal talks could reignite oil prices and inflation fears, while a hawkish Fed stance might further pressure high-valuation tech and AI stocks.
