[New York = E-Daily Seong Joowon Correspondent] On the 29th (local time), the New York stock market closed sharply lower. Although the U.S. Federal Reserve (Fed) decided at its July Federal Open Market Committee (FOMC) meeting to maintain the current benchmark interest rate of 3.50–3.75% per annum, Treasury yields actually surged, and concerns that “the Fed is falling behind in its response to inflation” weighed heavily on the market.

On that day, the Dow Jones Industrial Average closed at 51,594.14, plummeting 1,153.18 points (-2.19%) from the previous trading day, marking its largest single-day drop since April 2025. The S&P 500 index closed at 7,316.15, down 112.63 points (-1.52%), while the Nasdaq Composite Index closed at 24,442.94, down 433.97 points (-1.74%). The Nasdaq 100 has fallen about 11% from the high it reached last June, entering a technical correction phase.

Relief rally immediately following the decision to hold rates… gains erased as bond yields surged

At its FOMC meeting today, the Fed kept the benchmark interest rate at 3.50–3.75%. Three of the 12 committee members—Lori Logan, President of the Federal Reserve Bank of Dallas; Beth Hamack, President of the Federal Reserve Bank of Cleveland; and Neel Kashkari, President of the Federal Reserve Bank of Minneapolis—voted against the decision, advocating for a 0.25 percentage point hike, but the decision to keep rates unchanged stood. It was also notable that the statement was nearly identical in wording to that of the June meeting.
At a press conference that day, Fed Chair Kevin Warsh took a hawkish stance, stating, “The economy is showing impressive resilience,” and adding, “We will act without hesitation if necessary and appropriate.” The market briefly staged a relief rally immediately after the announcement, as some traders interpreted Chair Warsh’s remarks as a signal that “the likelihood of additional rate hikes in the near term is low.”
However, the relief rally did not last long. As Treasury yields surged, the market gave back all of its gains. The 10-year yield rose 7 basis points (bp; 1 bp = 0.01 percentage point) to 4.67–4.68%, while the 30-year yield climbed 10 bp to surpass 5.2%, reaching its highest level since 2007. In contrast, the 2-year yield—which is sensitive to Fed policy—actually fell. The divergent movements between long-term and short-term yields have led to the interpretation that the market is placing greater weight on “long-term inflation risks” rather than an “immediate rate hike.”
Jeffrey Gundlach of DoubleLine, appearing on CNBC, commented on the sharp rise in Treasury yields, noting, “The bond market has sent a signal to Chair Wash to show action, not just words.” Neil Dutta of Renaissance Macro Research also offered an assessment suggesting that Chair Wash had actually lost some credibility by choosing to hold rates steady rather than raising them to build trust.

Semiconductor Stocks

Fall

for Fifth Consecutive Trading Day… AI Investment Burden Persists Semiconductor stocks

continued to underperform today. The iShares Semiconductor ETF (SOXX) plunged 5.5%, extending its losing streak to

five consecutive trading days

. Micron and KLA each fell by about 10%, while AMD dropped 5.5%. It appears that concerns over profitability stemming from expanding artificial intelligence (AI) investments, coupled with fears of intensifying competition from China, continue to weigh on semiconductor stocks.
SK hynix(000660)Despite a sixfold surge in quarterly net income, the company’s U.S.-listed ADRs fell 10% as the results fell short of market expectations. AI infrastructure firm Vertiv also traded lower in the wake of weak earnings.
Elsewhere, Ford rose after raising its full-year earnings forecast for the second time this year, and Visa also gained on the back of strong earnings driven by the World Cup. In contrast, P&G fell as its results missed market expectations, and Caterpillar declined after Baird downgraded its investment rating due to concerns over limited data center expansion. Humana dropped sharply on concerns about rising healthcare costs, and Lennox fell significantly after lowering its full-year earnings forecast. Biogen rose on the back of strong earnings.

Oil Prices Surge, Dollar Weakens… Gold Prices Also Rise

International oil prices surged significantly today. After President Trump stated that he would “respond strongly” to Iran’s surprise attack on U.S. military forces, West Texas Intermediate (WTI) crude rose by over 6% to close around $84 per barrel, while Brent crude surpassed $90. This is interpreted as further stoking inflation concerns as tensions in the Middle East resurfaced.
The U.S. Dollar Index fell 0.3%, while major currencies such as the euro, pound, and yen showed slight strength against the dollar. Amid a flight to safety, gold prices rose 0.6% to $4,053.76 per ounce.