Article by: Tide Research
The Fed’s meeting itself was uneventful, with rates held steady, but three policymakers voted against the decision, advocating for a rate hike. Chair Powell declined to provide any forward guidance on future moves. What truly sent markets tumbling was a statement in the early hours: Trump threatened to “hit Iran very hard” in response to Iran launching missiles at U.S. military forces in the Middle East. Major indices plunged sharply in the final trading hours, with the Nasdaq 100 falling more than 11% from its June high, officially entering a technical correction.
Chip stocks fell for the fifth consecutive trading day, with Micron dropping nearly 10% in a single day, while the 30-year U.S. Treasury yield surged past 5.2%, reaching its highest level since 2007. After-hours earnings reports from tech giants delivered mixed results: Microsoft surged over 8%, while Meta plunged more than 10% due to guidance falling short of expectations.
Trump suddenly launched an attack in the early hours, causing a sharp decline in U.S. stocks during the closing session.
The S&P 500 fell 1.52% to 7,316.15. The Nasdaq dropped 1.74% to 24,442.94. The Dow Jones fell 2.19% to 51,594.14. The Nasdaq 100 declined 2.06%, falling more than 11% from its June high and officially entering a correction zone.
Just before 3 a.m. Beijing time, the three major indices were still rising. The true turning point came when Trump stated in a media interview that, due to Iran launching missiles at U.S. military forces in the Middle East, the United States "was due to strike back." As soon as he said this, the three major indices immediately reversed and plunged sharply.
The research firm Bespoke reviewed historical data and found that after the second press conference of a new Fed chair, there is typically some selling pressure toward the close—nothing unusual. What is unusual is that today’s sell-off was significantly sharper than historical patterns suggest. However, if we’re assigning blame, the bulk of it shouldn’t be attributed to Powell.
Following reports of missile strikes by Iran, Brent crude rose 3.4% to around $87, and WTI increased approximately 4% to around $82, ending a three-day downward trend.
Wash rejects forward guidance; 30-year U.S. Treasury yield breaks 5.2%, hitting an 18-year high.
The Fed’s latest decision maintained interest rates unchanged, but three dissenting votes called for a rate hike—an uncommon occurrence recently. During the press conference, when asked whether the next meeting would include a rate hike, Walsh avoided giving a clear answer, sticking to his stance of providing no explicit guidance to the market. He even stated that the recent rapid rise in U.S. Treasury yields had “done a lot of the Fed’s work for it,” yet yield movements themselves are merely market reactions to expectations around inflation and policy paths—ultimately, only the Fed can deliver on those expectations.
Meanwhile, the U.S. 30-year Treasury yield quietly surpassed the 5.2% mark—the highest level since 2007. To insiders, this cautious approach has a practical motive: Walsh is likely hoping to delay any decision until September. Scenario one: If tensions in the Middle East subside by then, the question of rate hikes becomes moot, and everyone wins. Scenario two: If inflation continues to accelerate over the next six weeks, Walsh will be forced to announce the two words Trump hates most—rate hike—before the midterm elections.
Ultimately, the next move in the inflation game lies in Trump’s hands, not Walsh’s. That day, he not only threatened to punish Iran but also expressed his desire to insert provisions imposing tariffs on Iran into the sanctions bill against Russia previously championed by the late Senator Graham.
Microsoft's earnings report was spectacular, but Meta's guidance left investors disappointed.
Post-market earnings results showed two extremes. Microsoft’s stock surged over 8% in after-hours trading, with fourth-quarter revenue reaching $90.01 billion, an 18% year-over-year increase, significantly surpassing market expectations of $87.72 billion. Adjusted earnings per share of $4.74 also greatly exceeded forecasts. Azure’s growth rate hit its highest level since 2022, and annual revenue surpassed $100 billion for the first time.
Meta’s story was the opposite, with its stock dropping over 10% after hours. While second-quarter revenue of $60.8 billion, up 28% year-over-year, was not weak, earnings per share of $6.18 fell below last year’s $7.14. Additionally, the company’s midpoint guidance for third-quarter revenue was below analyst estimates, raising investor concerns about the quality of its profitability and the pace of its spending.
Qualcomm fell nearly 5% after hours, as third-quarter revenue and earnings per share both declined year-over-year, with smartphone business revenue hitting its lowest level since 2021; the company also announced price increases for its processors starting in September. Lam Research rose over 5% after hours in contrast, while Arm fell over 3% after hours.
Chip stocks have fallen for five consecutive days, with Micron losing nearly 10% in a single day.
The Philadelphia Semiconductor Index plunged 5.33%, marking its fifth consecutive trading day of declines. Micron Technology opened higher but turned lower, crashing in the final moments to close down 9.94%, with its latest market cap falling to $864.6 billion. SanDisk shifted from gains to losses in the final moments, closing down 7.32%. Lumentum, a photonic communications stock, fell 7.61%, while both Intel and AMD declined more than 5%.
The loss leaderboard also features several familiar names: NVIDIA fell 3.55%, TSMC dropped 4.5%, Broadcom declined 2.78%, and SK Hynix slid 2.6%. Vertiv, a liquid cooling stock for data centers, plunged over 17%. Although its second-quarter revenue rose 24% year-over-year and its financials aren’t poor, the results slightly missed market expectations. Given that this stock had surged sharply this year, even a minor shortfall was amplified into a sell-off rationale.
Coca-Cola Energy shares rose against the market trend, with Chinese-listed stocks leading gains for three consecutive days.
In contrast to the poor performance of chip stocks, Coca-Cola rose 0.92% to a new all-time high, and energy stocks rose over 2% broadly amid escalating tensions in the Middle East. Chinese internet stocks continued their strong momentum for the third consecutive day, with the Nasdaq Golden China Index closing up 1.73%. Cryptocurrencies traded flat on the day; Bitcoin opened at $63,853.49, up 0.2%, and Ethereum opened at $1,919.73, up 1.5%.
In a market where a single sentence can crash prices, sentiment matters more than numbers.
The most memorable aspect of this day was the speed at which market sentiment shifted—the closing numbers themselves were secondary. What was an upward trend before midnight could turn into a sharp plunge at the close with just a single statement, illustrating how hypersensitive the current market has become to geopolitical risks, where even the slightest rumor can rewrite the day’s entire trajectory within minutes.
Microsoft and Meta delivered starkly contrasting results on the same day, perfectly illustrating the pricing logic that has repeatedly emerged over the past few weeks: investors are no longer satisfied with just revenue figures; what truly determines stock direction is whether capital expenditures can be justified by returns. Microsoft provided a clear answer with the growth rate of Azure, while Meta left this question unanswered.
Wash’s strategy to delay the decision until September is well-calculated, but whether it pays off ultimately depends on Trump—his next moves regarding Iran and whether oil prices will once again disrupt the inflation trajectory.
The fifth consecutive day of declines in chip stocks also indicates that the trust crisis, which first erupted in the storage sector, has not yet truly subsided. Tomorrow’s earnings reports from Apple and Amazon will be the next critical test.