Analysis
Last night in the U.S. stock market, the S&P 500 closed flat, edging up 1 point; the Dow rose half a point; and the Nasdaq-100 slipped 0.3%. Within the S&P 500, 328 stocks advanced and 175 declined. Application software surged 6%, while the Philadelphia Semiconductor Index fell as much as 5%, with Nvidia alone dragging the index down 21 points.
Why did the index barely budge while chaos erupted beneath the surface?
Today, let’s review yesterday’s session using a very Apple-esque title: “more is no longer more（多，不再是多）”.
Among the 11 sectors, consumer staples, communication services, and financials closed in the green. Information technology fell about 1%, and the Philadelphia Semiconductor Index dropped roughly 3% on the day (at one point down 5% intraday)—the two of them pinned the broader market to the mat. Meanwhile, the application software sector surged 6% overall, and Workday shot up 9% to top the S&P 500 gainers list (the IGV software ETF gained 3.33%). At the same time, the Russell 2000 small-cap index rose 0.6%. Money didn’t leave; it just jumped from the mega-caps into small- and mid-caps.
Nvidia fell 5%, wiping 21 points off the index. The trigger was concerns about “circular financing” linked to over $750 billion in new AI deals (including $500 billion with SK Group, a $250 billion backstop for OpenAI lease financing, and $35 billion in chip purchases).
ASML’s U.S.-listed ADR dropped 5.8%, after reports that a Shanghai-based Chinese company has started mass-producing immersion DUV lithography machines. That ripple hit equipment names like Applied Materials and Lam Research; storage stocks such as SanDisk fell 11%.
Apple was once handed a death sentence for having “no AI strategy,” yet it carved out differentiation through restraint: instead of going crazy pouring money into teams, it held onto its hardware and let developers grow. Now it fills the gaps with Google’s AI, and over the past few months it has been one of the best-performing big tech stocks.
You see—individual stocks are churning hard across this market.
This week is the busiest earnings week of the summer, with over 170 S&P 500 constituents reporting results; Apple, Microsoft, and Amazon hold the first, third, and fourth largest weightings in the index. This is also an FOMC week, with the decision coming out on Wednesday. The market broadly expects these giants to “beat on both revenue and earnings, yet still get sold.” When good news itself becomes the priced-in starting point, the tape can only be this twisted.
Beneath the surface, three stones are weighing on the market.
The first stone, oil. Brent crude plunged roughly 9% in a single day (still above $87, below $90, and nowhere near the March peak of $118) after the US paused strikes on Iran over the weekend and tried to restart talks—traders are stripping out the geopolitical risk premium. But don’t celebrate too early: the national average gasoline price still tops $5 per gallon, oil is up 20% this month, and gasoline has surged 45% this year. Airline stocks consequently bounced (the airline index is up 6% year-to-date), yet consumers are feeling real pain at the pump.
The second stone, the Fed. Wednesday’s FOMC meeting will bring a press conference from Chair Kevin Warsh. Former Governor Betsy Duke put it bluntly: there is “good reason to hike 25 basis points.” The Fed hasn’t met its target in over five years, the labor market is steady, growth is real, and current rates don’t exactly qualify as “restrictive”—she even expects a dissenting vote. Meanwhile, Jason Pride at Glenmede thinks the latest inflation print came in soft, giving the Fed room to keep watching. Two camps are fighting, but here’s the consensus: the 10-year yield at 4.64% and the 2-year at 4.318%—yields have now fallen for two straight days, which is the market catching its breath before the decision.
The third stone, China’s AI explosion. Jensen Huang is bullish on China’s AI, pointing out that China produces more AI researchers every year than the rest of the world combined. ChangXin surged 466% on its debut with a 2.4x oversubscribed order book, instantly becoming the largest onshore listed company on the A-share market.
Let’s compress yesterday’s market into three lines.
First, the AI thesis isn’t broken—only those that can recoup their costs deserve to rally.
Second, rates are the anchor hanging over the market. With the Fed decision and mega-cap earnings both landing on Wednesday, the retreat in the 10‑year yield to 4.64% is just a breather. The moment an inflation print forces a hawkish dissent, the narrative gets rewritten.
Third, breadth is this market’s backbone. On a “flat day” with 328 advancers and 175 decliners, money was simply rotating, not exiting.
We’re not debating right or wrong—we’re just waiting for Wednesday.
Money never sleeps. See you next time.