Wall Street closed lower Tuesday for a third consecutive session as a severe pullback in semiconductor stocks compounded pressure from surging bond yields. The S&P 500 declined 0.69% to 7,691.76 and the Nasdaq Composite fell 1.33% to 26,289.71, while the Dow Jones Industrial Average shed 116 points to 53,343.40. The Philadelphia Semiconductor Index tumbled more than 5%, erasing hundreds of billions in market value, with Sandisk falling 9%, Western Digital 7%, and Marvell Technology and Seagate each dropping roughly 8-9%.
The catalyst is a compounding of geopolitical and monetary forces. Stalled U.S.-Iran negotiations over control of the Strait of Hormuz have kept oil prices near $85 a barrel, feeding inflation concerns. That, combined with heavy government borrowing globally and AI investment-driven debt issuance, pushed the 30-year Treasury yield to its highest level since 2007 and the 10-year to its highest since early 2025. As analysts noted, these conditions tighten financial conditions even without a Fed move, lowering the present value of future technology earnings and raising corporate borrowing costs across the board.
The selloff spread to Asia overnight Wednesday. The MSCI Asia-Pacific equities benchmark slid 2%, South Korean shares dropped 5.5%, and chip bellwethers Samsung Electronics and SK Hynix both fell more than 7%. Kioxia Holdings plunged 9% in Tokyo. The Nikkei 225 extended declines, trading down roughly 2.5-3% in early Wednesday trade, marking its second straight losing session.
The focal point of Wednesday's session is the 2:00 p.m. ET release of the FOMC minutes from the July 28-29 meeting. At that meeting, the Fed held the federal funds rate steady at 3.50%-3.75%, but three participants dissented in favor of a 25-basis-point increase, an unusually visible split. Markets will scrutinize the minutes for how broadly hawkish sentiment extended into the voting majority, and whether the committee's language leaves a September rate hike on the table. Subsequent data, including a drop in July payrolls and cooler CPI, have softened hike expectations, and September odds stand near one in three entering today.
July housing starts and building permits data released Tuesday showed a mixed picture, with permits, a leading indicator, up 5% month-over-month to a seasonally adjusted annual rate of 1.44 million, topping estimates. Home Depot's CFO described the broader housing backdrop as 'frozen,' noting 30-year fixed mortgage rates remain near 6.7%, suppressing turnover and large discretionary renovation projects. Elevated long-term Treasury yields continue to flow through to mortgage rates, a direct constraint on housing activity and related small business demand.
More than 91% of the S&P 500 has now reported Q2 earnings, with 84% topping expectations according to FactSet, but retailers face a higher bar after July retail sales fell 0.6%, the first monthly decline in nine months. Analysts have flagged a K-shaped consumer environment, with higher-income households continuing to spend while lower-income families pull back. Lowe's and Target were reporting Wednesday morning, following Home Depot's beat on Tuesday and TJX's strong results pre-open.
Home Depot reported fiscal Q2 adjusted EPS of $4.92, beating the $4.73 analyst consensus, on revenue of $47.86 billion, up 5.7% year-over-year and above the $47.23 billion estimate. Comparable sales rose 1.7%, ahead of the roughly 1% expected, driven by higher average ticket sizes and strength in spring outdoor categories; 13 of 16 product categories posted positive same-store sales growth. The company reaffirmed full-year sales growth guidance of 2.5% to 4.5%, and noted it received $730 million in tariff refunds during the quarter, of which $685 million reduced cost of goods sold.
TJX Companies reported Q2 EPS of $1.10, topping the $1.01 consensus, on revenue of $14.40 billion, up 7% year-over-year and above the $14.13 billion estimate; comparable sales grew 4%, exceeding the company's own plan. TJX raised its fiscal-year 2026 GAAP EPS guidance to $4.52-$4.57 from $4.34-$4.43, and shares gained approximately 4.5% Wednesday morning. The HomeGoods banner and the TJ Maxx and Marshalls chains both benefited from consumers across income levels seeking value amid sticky inflation.
The minutes of the Federal Open Market Committee's July 28-29 meeting are scheduled for release at 2:00 p.m. ET Wednesday, three weeks after the Fed held the federal funds rate at 3.50%-3.75% in a 9-3 vote, with three participants preferring a 25-basis-point increase. Markets are watching for whether hawkish sentiment extended beyond the three formal dissenters, and for the conditional language officials used to describe what data would justify a hike. Subsequent data, including weaker payrolls, cooler CPI, and a 0.6% drop in retail sales, have cut September hike odds to roughly one in three, but the minutes' reaction function language remains live.
The Kansas City Federal Reserve confirmed the 2026 Jackson Hole Economic Policy Symposium will run August 27-29, with Fed Chair Kevin Warsh delivering the keynote address Friday morning, August 28, his first at the annual gathering since becoming chair. The symposium theme is 'Financial Innovation: Implications for Payments and Policy,' with roughly 120 central bankers, economists, and officials from more than 70 countries attending. The event lands eight days before the September 16 FOMC decision, making Warsh's remarks the most closely watched monetary policy signal of the month for businesses planning around borrowing costs.
Private equity firm KKR offered to acquire UGI Corp, the Pennsylvania-based natural gas and electricity distributor, for approximately $9 billion at $42.50 per share, a 21.1% premium to UGI's Monday close of $35.09, according to reporting first by the Wall Street Journal and subsequently confirmed by Reuters. UGI shares surged more than 12% on the news Tuesday, briefly triggering a volatility halt. The bid reflects intensifying private equity interest in reliable power infrastructure as surging electricity demand from AI data centers reshapes the U.S. energy market and puts natural gas assets back in investor focus.
The chip selloff that began on Wall Street extended to Asia overnight, with Samsung and SK Hynix each down more than 7% and Kioxia falling 9% in Tokyo, as investors unwound positions in one of 2026's best-performing trades. High bond yields are compressing the present value of future earnings for capital-intensive chip companies, and analysts note that a surge in AI-related debt issuance is itself contributing to higher yields, creating a self-reinforcing pressure on the very sector driving AI infrastructure spending. Nvidia fell 2.4% in Tuesday's session and reports quarterly earnings on August 26.
The 30-year Treasury yield above 5.3% and 10-year near 4.75% mean borrowing costs for business loans, equipment financing, and commercial real estate are at their most expensive in years, even without a Fed rate hike. Operators with variable-rate debt or near-term refinancing needs should review their exposure now and consider locking in fixed terms if available, rather than waiting for a rate cut that may not come this year.
The retail earnings picture tells a nuanced story for small and mid-sized suppliers and service providers: off-price and value channels are gaining share, as TJX's strong comparable sales growth and Home Depot's higher average ticket sizes both confirm that consumers are still spending but are increasingly selective. If your business serves higher-income or trade-oriented customers, demand holds; if you are exposed to lower-income or high-frequency discretionary traffic, the K-shaped consumer and falling July retail sales are a real risk to monitor heading into the fall season.