Market Wrap US-Europe 29 July: Dow Falls 2.2 Percent as Oil Jumps, Long Yields Rise

By The Edge Research Team

Wall Street sold off hard into the closing bell on Wednesday, and the damage arrived after the Federal Reserve had already finished speaking. The Dow Jones Industrial Average closed 1,153.18 points lower at 51,594.14, a fall of 2.19 percent and, per CNBC, its worst single session since April 2025. The S&P 500 lost 1.52 percent to 7,316.15 and the Nasdaq Composite fell 1.74 percent to 24,442.94, while the Philadelphia Semiconductor Index dropped 5.33 percent to 10,447.49 and the VIX jumped 13.45 percent to 20.66. Oil ran the other way, adding roughly 8 percent as the security premium returned. The session’s defining feature was not the rate decision, which was widely expected, but the shape of the yield curve that formed around it.

That shape is the analytical core of the day, and the important point is that it steepened by twisting rather than by moving in one direction. The short end fell. The two-year Treasury yield eased about 1 basis point to 4.266 percent, the three-month fell about 7 basis points to 3.782 percent and the six-month fell about 8 basis points to 3.952 percent. The long end rose at the same time, with the ten-year up about 8 basis points to 4.687 percent and the thirty-year up about 12 basis points to 5.212 percent. On those closing levels the gap between the two-year and the ten-year widened to about 42 basis points from about 33, and the gap between the two-year and the thirty-year widened to about 95 basis points from about 82. A curve that moves this way is not pricing imminent rate increases at the front, and it is demanding more compensation to hold duration at the back.

What the long end is pricing is a question the day does not settle. Higher inflation expectations are one candidate, and CNBC reported that the bond market held doubts even as the Chairman said the Federal Reserve would not hesitate to stop inflation. A wider term premium, the weight of federal borrowing and simple positioning are others, and Wednesday’s move does not separate them. What can be said without qualification is that long-dated borrowing costs rose on a day the policy rate did not.

The equity decline was broad rather than confined to technology, though semiconductors were by some distance its deepest pocket. The NYSE Composite, the widest of the major measures, fell 1.18 percent to 23,944.97, so even the broad tape lost ground. The heaviest losses were in the large-capitalisation benchmarks, with the Dow down 2.19 percent and the Nasdaq 100 down 2.06 percent to 27,192.31, both weaker than the S&P 500 and the Nasdaq Composite, while the Russell 2000 lost 1.61 percent to 2,906.31. Within that, the chip complex stood apart. The iShares Semiconductor ETF was down 3.8 percent during the session, taking its week-to-date loss to 10.4 percent, and Truist Securities noted that the Philadelphia Semiconductor Index had fallen 25 percent from its 22 June peak while arguing that underlying artificial-intelligence demand signals remained strong. Barclays made the mirror-image point on positioning, writing that financial conditions continue to tighten as rate-increase expectations move higher and real yields approach levels that have historically become a headwind for equities.

The megacap tape was weak with one exception. Apple closed at 338.19 dollars, down 0.56 percent, for a market value of about 4.97 trillion dollars, while Nvidia fell 3.55 percent to 190.01 dollars for about 4.60 trillion dollars. On our calculation the gap between the two largest listed companies widened to roughly 369 billion dollars, from about 227 billion dollars at Tuesday’s close, an unusually fast move in a two-session window. Alphabet was the only gainer among the seven largest, rising 0.90 percent to 336.71 dollars for about 4.06 trillion dollars. Microsoft eased 0.71 percent to 390.54 dollars, Amazon fell 1.82 percent to 226.65 dollars, Meta Platforms lost 1.31 percent to 585.61 dollars and Tesla dropped 2.97 percent to 298.32 dollars.

After the close, and outside the regular session, two of those names moved sharply on earnings, in opposite directions and for opposite reasons. Microsoft rose about 3 percent in extended trading, quoted 2.81 percent higher at 401.52 dollars, after reporting fiscal fourth-quarter revenue of 90.01 billion dollars against a 87.62 billion dollar consensus, growth of about 18 percent, with Azure growth accelerating to 43 percent from 40 percent in the prior quarter and full-year Azure revenue exceeding 100 billion dollars for the first time. Meta Platforms fell 9.83 percent to 528.06 dollars on the cash line rather than the revenue line: second-quarter revenue of 60.80 billion dollars beat a 60.17 billion dollar consensus, but earnings of 6.18 dollars a share missed a 7.22 dollar estimate, current-quarter revenue guidance of 61 to 64 billion dollars came in below the 63.15 billion dollars expected, and free cash flow collapsed to 784 million dollars from 8.55 billion dollars a year earlier as the company narrowed its 2026 capital-expenditure range to 130 to 145 billion dollars and lifted its floor. Neither move is part of Wednesday’s closing figures and neither is carried in the tables below, but both will shape Thursday’s open.

The rate decision itself was the day’s fixed point rather than its surprise. The Federal Open Market Committee held the target range at 3.50 to 3.75 percent on a nine to three vote, with Cleveland’s Beth Hammack, Minneapolis’s Neel Kashkari and Dallas’s Lorie Logan voting to raise it. Morgan Stanley Investment Management’s Jim Caron described the outcome as the Federal Reserve invoking patience rather than tightening, and observed that the market was doing the tightening on its behalf, with equities falling and bond yields rising. Ahead of the announcement, CME Group’s FedWatch tool showed markets pricing about a 76 percent probability of a September increase; that figure is a pre-decision reading and the post-conference repricing is not carried here. The Chairman’s news conference is covered separately.

Europe closed before Wall Street’s slide and was therefore almost untouched by it. The pan-European Stoxx 600 eased 0.29 percent to 645.01 in a session that had opened higher on basic resources and oil and gas. London’s FTSE 100 was the regional outlier, rising 0.34 percent to 10,908.41 on its energy and commodity weighting, while Frankfurt’s DAX finished effectively flat, down 0.01 percent at 25,460.48. Milan’s FTSE MIB fell 0.49 percent to 51,443.11, Paris’s CAC 40 lost 0.60 percent to 8,408.27, the Euro Stoxx 50 declined 0.65 percent to 6,248.84 and Madrid’s IBEX 35 was the weakest major, down 1.59 percent to 19,412.70.

European corporate news pulled in both directions. Kering rose as much as 11 percent after posting its first revenue growth in eleven quarters, and Deutsche Bank added about 3.6 percent after second-quarter net profit rose 10 percent to 1.9 billion euros with pre-tax profit up 11 percent to 2.7 billion euros. Against that, Hermes was briefly suspended in Paris after falling 10 percent on a second-quarter sales performance that disappointed investors, and UBS reported a second-quarter net profit of 2.8 billion dollars in line with consensus, with pre-tax profit up 64 percent to 3.6 billion dollars and a common equity tier one ratio easing to 14.4 percent.

Oil was the day’s other large move, and it ran directly against equities. Brent crude rose 8.07 percent to 90.88 dollars a barrel and West Texas Intermediate gained 6.98 percent to 84.79 dollars, the closing references carried in our 29 July commodities wrap, after a pause in US-Iran hostilities broke down and the United States signalled retaliation for an attempted missile attack on its forces. Gold’s closing reference was 4,065.80 dollars an ounce. Elsewhere in the complex, silver rose 0.64 percent to 57.90 dollars, natural gas gained 2.18 percent to 2.72 dollars, ultra-low-sulphur diesel jumped 5.17 percent and copper eased 0.20 percent, while the grains fell, soybeans down 2.34 percent and corn down 1.98 percent.

In currencies and crypto, the dollar weakened even as long-dated yields rose, an unusual pairing that says more about inflation and term-premium risk than about growth. The ICE US Dollar Index fell 0.58 percent to 100.829. Wednesday’s closing levels were 1.1465 for the euro, 1.3369 for sterling and 163.38 yen to the dollar; percentage changes for those three pairs are withheld because the feed had already rolled into the next session by the time of the final read, and the price basis below sets out why. The Egyptian pound eased 0.34 percent to 50.62 to the dollar, holding below the 51 line, and the Kuwaiti dinar was little changed at 0.3078 to the dollar. Bitcoin slipped 0.34 percent to about 63,490 dollars.

For regional reference, the Gulf, Egypt, Jordan and Asia had all closed before the Wall Street slide, and their 29 July marks are carried below from our 29 July MENA and Asia wrap. The pattern there was the near-inverse of New York’s: Hong Kong’s Hang Seng rose 1.96 percent, Singapore’s Straits Times 1.73 percent and Australia’s ASX 200 1.01 percent, while Jordan’s ASE added 0.53 percent and Oman’s MSX 30 0.47 percent, with Dubai and Abu Dhabi both slightly higher. Saudi Arabia’s TASI eased 1.25 percent, Kuwait’s All Share Index 0.28 percent and Egypt’s EGX 30 0.19 percent. The heavy Asian losses were again in the chip belt, with South Korea’s Kospi down 5.98 percent after a second consecutive circuit breaker and Taiwan’s Taiex down 3.76 percent.

US and Europe equities, 29 July closes, ranked by change

MENA and Asia equities, 29 July closes, for reference, ranked by change

Rates, volatility, commodities, currencies and crypto, 29 July

Price basis: US index levels, the Treasury yields, the VIX and the dollar index are official 29 July closing prints and closing yields via CNBC, read after the closing bell; the yield curve is a market closing-quote series, not the US Treasury’s official daily par-yield series, which had not published a 29 July row at the time of writing. The two spread figures are our own arithmetic on those closing yields. European index levels are 29 July closes via CNBC, and European markets closed before the late New York decline. Megacap closing prices and market values are 29 July closes via CNBC; the extended-trading moves and the earnings figures for Microsoft and Meta Platforms are after-hours information, not closing prices, and are excluded from all tables. Brent, West Texas Intermediate and gold are the closing references carried in our 29 July commodities wrap, retained for consistency across the two reports, and are references rather than official exchange settlements; the CNBC front-month settlements printed 84.60 dollars for West Texas Intermediate, up 6.74 percent, and 4,065.50 dollars for gold, up 0.66 percent. MENA and Asia figures are 29 July closes reused from our 29 July MENA and Asia wrap. For the euro, sterling and the yen, the levels shown are the 29 July closes, but percentage changes are withheld: the CNBC currency feed rolls its session at about 5 p.m. New York, so by the time of the final read those pairs were already quoting the following session and their displayed change did not describe Wednesday. The dollar index had not rolled and its 0.58 percent decline is the verified Wednesday move. Bitcoin is a late-session quote rather than a settlement.

Why it matters: Wednesday separated the policy decision from the policy consequence. The rate was held, and financial conditions tightened anyway. The signal to read is the twist in the curve, a lower bill and two-year complex alongside a materially higher long end, because it tells you the repricing happened at the maturities the Federal Reserve does not set. That combination, a softer dollar with a higher thirty-year yield and crude up roughly 8 percent, has the shape of a supply-side inflation and term-premium repricing rather than a demand slowdown, though bond supply and positioning cannot be excluded as contributors. For the Gulf the net balance is favourable. The renewed security premium in crude supports hydrocarbon revenue and fiscal receipts in Saudi Arabia, Kuwait, the United Arab Emirates and Qatar, and regional equities absorbed the day considerably better than the markets pricing its consequences. Two offsets deserve stating plainly: the same event that lifted crude raised regional security risk, and a higher long end in Washington raises the cost of dollar funding for every issuer on the curve, which is where the pressure eventually lands for dollar-pegged economies. For Egypt and Jordan, a softer dollar and a pound holding below 51 cushion the import bill only partly against an oil move of that size.

Outlook: Four things to watch. First, the thirty-year yield at 5.212 percent, because the long end rather than the policy rate is now carrying the inflation and term-premium argument, and a further move there would tighten conditions without the Federal Reserve doing anything. Second, Thursday’s open after two large post-close earnings moves in opposite directions, with Microsoft up on cloud and Meta Platforms sharply down on cash generation, which will test whether the selling stays in the large-capitalisation complex or broadens. Third, the chip complex itself, with the Philadelphia Semiconductor Index down 5.33 percent on the day and the sector benchmark ETF down more than 10 percent on the week, the single clearest measure of whether this is a positioning unwind or something wider. Fourth, crude, where an 8 percent day on renewed US-Iran hostilities is the variable that most directly links the Gulf’s revenue outlook to Washington’s rate path.

Sources: CNBC; Board of Governors of the Federal Reserve System; CME Group FedWatch.

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