U.S. stocks saw a mixed performance on Tuesday as investors weighed stronger-than-expected corporate earnings, including those from Coca-Cola, against a decline in global oil prices. Capital flowed into consumer, financial, and healthcare sectors, propelling the Dow Jones Industrial Average up by more than 500 points for its third consecutive session of gains. Conversely, global semiconductor stocks faced a sharp sell-off, with the Philadelphia Semiconductor Index plunging nearly 5%. The bearish sentiment, which originated in Asian and European chip markets, spilled over into U.S. semiconductor stocks, dragging the Nasdaq Composite lower. In the cryptocurrency market, Bitcoin (BTC) and Ethereum (ETH) traded with volatility as market participants awaited the Federal Reserve's (Fed) interest rate decision and earnings reports from major U.S. tech giants.

Falling Oil Prices Bolster Broad Market as Investors Await Fed Decision

Following the continuation of a de facto ceasefire between the U.S. and Iran over the weekend, West Texas Intermediate (WTI) crude futures dropped approximately 4% on Tuesday to settle at $79.26 per barrel, while Brent crude futures fell 4.8% to $84.09 per barrel. Concerns over supply disruptions eased as Iran engaged in discussions regarding the Strait of Hormuz with Saudi Arabia and Oman.

The retreat in oil prices provided support for the broader market, driving a rotation from high-valuation tech stocks into traditional sectors. The SPDR Select Sector Fund (XLV) and the Financial Select Sector SPDR Fund (XLF) both reached all-time highs, largely driven by gains in insurance stocks. The Federal Reserve is set to announce its interest rate decision on Wednesday, with the market widely expecting interest rates to remain unchanged. According to the CME FedWatch Tool, the market is currently pricing in a potential 25-basis-point (0.25%) rate hike for September.

Semiconductor Stocks Hit by Sell-off; Nvidia’s Funding for OpenAI Raises Circular Financing Concerns

Semiconductor stocks came under renewed pressure on Tuesday, leading to a nearly 5% drop in the Philadelphia Semiconductor Index. Market sentiment was dampened by concerns that Nvidia (NVDA)’s proposed $250 billion financing for OpenAI-related data center projects could exacerbate circular financing risks within the Artificial Intelligence (AI) sector. Furthermore, China's advancements in AI models, memory chips, and domestic DUV (Deep Ultraviolet) lithography machines have heightened competitive anxieties. The Korea Composite Stock Price Index (KOSPI) plummeted 10.8% on Tuesday, dealing a further blow to global semiconductor market confidence.

In terms of individual stock performance, AMD tumbled 8.15%, Qualcomm (QCOM) fell 4.21%, Micron (MU) slumped 8.85%, and Applied Materials (AMAT) shed 7.82%, while Nvidia bucked the trend, rising 0.25%. Most Taiwanese ADRs closed in the red: TSMC (TSM) fell 1.70%, ASE Technology (ASX) dropped 7.17%, and UMC (UMC) plunged 9.01%. Apple (AAPL), however, rose by over 0.9% to $340.08 per share, with its market capitalization briefly surpassing $5 trillion for the first time during the session.

Bitcoin Retreats to $63K as Weekly Earnings Take Center Stage

The cryptocurrency market is keeping a close watch on the sell-off in U.S. tech stocks and incoming macroeconomic data. According to today's market data, Bitcoin (BTC) is trading at $63,775, down 0.20% over the past 24 hours, while Ethereum (ETH) is at $1,911, up 0.81%. Dragged down by the decline in the semiconductor sector and a 0.22% drop in the Nasdaq, the broader digital asset market remains in a state of consolidation on low volume.

Corporate earnings remain the primary market focus this week. Microsoft (MSFT) and Meta (META) are scheduled to release their latest quarterly results after the U.S. market close on Wednesday, followed by Amazon (AMZN) and Apple on Thursday. Investors will be closely scrutinizing AI capital expenditures, cloud business growth, and forward-looking guidance. The results from these tech giants will directly influence whether the current sell-off in tech stocks abates and will indirectly dictate the flow of capital within the cryptocurrency market.

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