U.S. markets pause at start of third quarter as crude falls and tech momentum cools

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U.S. markets pause as Q3 starts

Highlights

U.S. indexes open Q3 weaker with the Dow Jones down 0.19%, S&P 500 off 0.21%, and Nasdaq nearly 1% lower as tech momentum cools.
WTI crude drops 1.1% to below $68 on reduced supply fears after U.S.-Iran peace progress, while gold retreats 16% in Q2 and is 25% off its January peak.
Sandisk surges 845% year to date as the chip rally adds $2 trillion to Micron, Intel, and AMD, supported by strong semiconductor and tech gains.

Early trading signals and market drivers

Cboe Global Markets says equities are taking a breather in early third-quarter trading after a powerful rally at the end of the second quarter. The Dow Jones Industrials is down 0.19%, the S&P 500 is slipping 0.21% and the Nasdaq Composite is moving toward a decline of nearly 1%.

WTI crude is also lower, falling below $68 a barrel, down 1.1%, in a move that suggests investors are less anxious about disruption tied to U.S.-Iran peace talks. Oil shipments are continuing through the Strait of Hormuz, easing some immediate supply concerns and offering some relief for fuel consumers.

Traders are also monitoring comments from Federal Reserve Chair Kevin Warsh, who is appearing on a panel with other central bankers in Europe. He is so far offering limited guidance on rates, while saying the Fed is charting a new course to improve monetary policy decisions.

Precious metals remain in focus as gold and silver have weakened in recent sessions, reflecting expectations for higher interest rates. Gold has fallen sharply since reaching a record high in January, retreating nearly 16% in the second quarter and about 25% from its peak, although it is edging higher in early trading.

Among individual stocks, Meta stands out with a gain of more than 8% after Bloomberg reports that the company is developing plans for a cloud infrastructure business that would generate revenue by selling access to AI computing power.

Quarter-end rally, jobs data and earnings pressure

The first half closes with strong gains across major indexes, including a fresh peak for the Dow Jones Industrials, while the S&P 500 and Nasdaq Composite finish the quarter in their strongest position in six years. In the previous session, the Dow rises 0.26% to 52,319.20, the S&P 500 gains 0.79% and the Nasdaq advances 1.52%, extending a rally led largely by semiconductor and technology shares.

That surge has produced extraordinary stock moves in parts of the chip sector. Sandisk is up 845% year to date, while Micron gains 302%, Intel rises 277%, Western Digital climbs 269%, Marvell adds 198% and Advanced Micro Devices advances 171%; reports cited in the text say the chip rally adds a combined $2 trillion in market value to Micron, Intel and Advanced Micro Devices.

On the labor front, U.S. job openings and hiring show a steady pattern in May. Vacant positions total 7.6 million, largely unchanged from 7.59 million a month earlier, while 5.2 million Americans are hired, up 3.3%; layoffs edge up to 1.1% from 1%, indicating a labor market that appears to be stabilizing as investors await weekly jobless claims on Thursday.

Corporate earnings are offering a mixed picture for consumer-facing companies. Nike beats Wall Street's lowered expectations, but its shares come under pressure after the company reports a 1% revenue decline, flags weakness in China despite a smaller-than-expected drop there, and warns that the next six months will be challenging because consumers are under pressure globally.

Constellation Brands also beats expectations despite softer demand tied to higher gasoline prices and a fragile economy, particularly for lower-income consumers. Beer sales rise 2% year over year to $2.28 billion, helped by Modelo Especial and Corona Extra, but the company says it still sees a difficult path ahead as consumers shift toward ready-to-drink beverages, flavored seltzers and more moderate alcohol consumption.

In our earlier article on U.S. stocks cooling after a strong first-half rally, we noted that futures turned lower as investors shifted toward profit-taking and looked for fresh catalysts across big tech, semiconductors, transport, and financials. We also highlighted renewed attention on AI monetization and chip supply dynamics, including Meta’s reported plans to sell access to surplus AI computing capacity and Micron’s expectations for more long-term supply agreements amid tight memory supply.

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