Market Summary
U.S. equities finished broadly lower on Tuesday, August 18, as a sharp reversal in semiconductor and other momentum-driven names overwhelmed gains in defensive and commodity-linked sectors. The S&P 500 fell 53.30 points (-0.69%) to close at 7,691.76, while the Nasdaq Composite led the retreat with a 355.20-point decline (-1.33%) to 26,310.74. The Dow Jones Industrial Average was comparatively resilient, shedding just 116.38 points (-0.22%) to 53,343.40, aided by its limited semiconductor exposure and strength in several defensive components.
Technology was ground zero for the selloff, with the PHLX Semiconductor Index tumbling 5.0% and erasing Monday’s advance and then some. The weakness spilled into industrial names tied to the AI infrastructure buildout, pressuring the industrials sector, while elevated Treasury yields continued to weigh on growth stocks broadly — the Vanguard Mega Cap Growth ETF fell 1.1%. A clear rotation into defensives took hold, with health care and consumer staples posting solid gains and providing meaningful support to the Dow.
The market’s tone deteriorated as the session progressed. Early strength in several sectors initially insulated the broader tape from the tech-driven decline, but selling pressure eventually broadened, leaving the Russell 2000 (-1.3%) and S&P MidCap 400 (-1.6%) with sizable losses alongside the majors. The session reflected a pronounced unwind of the market’s strongest momentum trades — led by semiconductors — against a backdrop of elevated rates, rising oil prices, and soft housing data.
Market Snapshot
| Index | Level | Change | % Change |
|—|—|—|—|
| Dow Jones Industrial Average | 53,343.40 | -116.38 | -0.22% |
| Nasdaq Composite | 26,310.74 | -355.20 | -1.33% |
| S&P 500 | 7,691.76 | -53.30 | -0.69% |
Breadth (NYSE): Advancers 945, Decliners 1,779, Volume 1.10 bln
Breadth (Nasdaq): Advancers 1,669, Decliners 2,740, Volume 7.39 bln
WaveFinder Breadth Metrics:
- Primary Sentiment: Bullish | 4% Sentiment: Bearish | 40 SMA Sentiment: Bearish
- Primary Bulls: 1,194 | Bears: 755
- 4% Bulls: 110 | Bears: 271
- % Above 20 SMA: 39%
- % Above 40 SMA: 52.43%
- 9-Month Bulls: 8 | Bears: 41 (Bull Follow-Through: 17.86%)
YTD Performance: Russell 2000 +21.6% | S&P MidCap 400 +16.6% | Nasdaq Composite +13.1% | S&P 500 +12.4% | DJIA +11.0%
Sector Performance
Strong:
1. Energy (+1.8%) — topped standings on rising crude prices amid geopolitical tension
2. Health Care (+1.6%) — defensive rotation; JNJ and AMGN standouts
3. Consumer Staples (+1.1%) — defensive rotation; KO among leaders
4. Financials — noted as strong in Industry Watch, no specific % provided
Weak:
5. Communication Services (-0.6%) — META weighed heavily
6. Real Estate — weak per Industry Watch
7. Consumer Discretionary — weak per Industry Watch
8. Materials — weak per Industry Watch
9. Utilities — weak per Industry Watch
10. Industrials (-1.5%) — pressured by AI/semiconductor-linked names; CAT a notable laggard
11. Information Technology (-1.9%) — bottom of standings; semiconductors led the decline
WaveFinder Sector ATR (Volatility):
- Energy: 3.41% (rising, P100)
- Communication Services: 1.37% (rising, P89)
- Health Care: 2.05% (falling, P53)
- Industrials: 1.12% (falling, P32)
- Materials: 0.95% (falling, P42)
- Financials: 0.72% (flat, P0)
- Technology: -0.69% (rising, P68)
- Real Estate: -0.79% (flat, P0)
- Utilities: -0.97% (flat, P21)
- Consumer Discretionary: 0.31% (falling, P21)
- Consumer Staples: 0.31% (flat, P5)
Key Earnings & Movers
- Fabrinet (FN) 482.52, -116.06 (-19.39%) — Plunged despite beating Q4 estimates and issuing above-consensus Q1 guidance; not an S&P 500 component but dragged down peers
- Lumentum (LITE) 873.31, -95.59 (-9.87%) — Weakness tied to semiconductor/optical selloff
- Coherent (COHR) 306.12, -45.10 (-12.84%) — Weakness tied to semiconductor/optical selloff
- Teradyne (TER) 404.29, -38.85 (-8.77%) — Among S&P 500’s worst performers
- Caterpillar (CAT) 840.83, -40.82 (-4.63%) — Gave back Monday’s gains, tied to AI infrastructure spillover
- Meta Platforms (META) 543.67, -25.30 (-4.45%) — Pressured by opening arguments in child social-media addiction case
- Johnson & Johnson (JNJ) 271.12, +8.75 (+3.33%) — Defensive leader
- Coca-Cola (KO) 88.82, +1.84 (+2.12%) — Defensive leader
- Amgen (AMGN) 425.28, +5.90 (+1.41%) — Fresh all-time high, extending post-earnings advance
- Home Depot (HD) 337.67, -0.21 (-0.06%) — Gave up early gains despite Q2 beat on EPS, revenue, and comps; maintained FY27 guidance but flagged “frozen housing market” conditions
- Keysight and Toll Brothers — Modestly higher after-hours following earnings reports
Stock Spotlight
Fabrinet (FN) was the session’s most dramatic mover, plunging 19.39% to $482.52 despite delivering a Q4 (June) beat and issuing guidance above consensus. Adjusted EPS of $4.10 topped expectations, and revenue grew 44.6% yr/yr to $1.32 billion, with Q1 guidance calling for EPS of $4.10-$4.25 and revenue of $1.375-$1.425 billion. The company restructured its reporting into three segments: Data Center (revenue +68% yr/yr to $669 mln, led by DCI and HPC), Communications Infrastructure (+40% yr/yr to $413 mln), and Automotive, Industrial and Other (+8% yr/yr to $234 mln).
Management struck an optimistic tone, citing a hyperscaler-direct transceiver program ramping this quarter, a merchant program beginning in the December quarter, customer visibility extending through 2027, and the potential for “another year of accelerating growth” in FY27. Despite this robust demand backdrop, shares sold off sharply — likely reflecting a high bar set by a strong pre-earnings run, a 30-bps yr/yr decline in gross margin, and less straightforward comparisons under the new segment structure. The stock’s slide also dragged down related names Lumentum, Coherent, and Teradyne, amplifying the broader semiconductor-sector rout.
Bond Market & Treasuries
U.S. Treasuries staged a modest rebound Tuesday after opening weakness briefly pushed the 30-year yield to a fresh 2026 high of 5.326% (settling at 5.29%, -2 bps). The long bond led the bounce as underwhelming July housing data helped drive a shift into safer assets.
Yield Check:
- 2-yr: 4.18% (unchanged)
- 3-yr: 4.25% (-1 bp)
- 5-yr: 4.37% (-1 bp)
- 10-yr: 4.71% (-2 bps)
- 30-yr: 5.29% (-2 bps)
Key drivers included the 30-year yield’s early spike to a fresh yearly high, weak U.S. housing starts data, crude oil’s approach toward $85/bbl amid Strait of Hormuz tensions, and a lowered Atlanta Fed GDPNow Q3 forecast (to 4.0% from 4.3%). The U.S. Dollar Index held near flat at 99.64. A $16 billion 20-year Treasury bond auction was conducted at 13:00 ET.
Commodities
| Commodity | Price | Change |
|—|—|—|
| WTI Crude Oil | $84.88/bbl | +0.5% (+$0.42) |
| Gold | $4,420.80/ozt | -1.2% |
| Copper | $6.49/lb | -2.0% |
Crude oil continued its recent climb on renewed geopolitical uncertainty, with the market digesting an overnight strike on a cargo ship in the Strait of Hormuz and President Trump’s acknowledgment that another Iran ceasefire is not being pursued. Brent crude was noted trading up 0.3% to $91.14/bbl in premarket activity.
Overseas Markets
Specific overseas equity index closing levels were not provided in today’s data; however, global bond markets showed pronounced yield pressure, reflecting broader risk-off dynamics:
- Japan: 10-year note yield hit its highest level in more than 40 years (2.954%)
- Germany: 30-year bund yield reached its highest level in 15 years (3.779%); August ZEW Economic Sentiment rose to 34.2 from 26.3 (expected 30.1); ZEW Current Conditions improved to -61.1 from -77.6 (expected -68.8)
- France: 10-year OAT yield hit its highest level since 2008 (4.11%)
- Eurozone: August ZEW Economic Sentiment rose to 31.4 from 23.4 (expected 25.9); ECB Chief Economist Lane said inflation is expected to remain around 3.0% for the remainder of the year
- U.K.: June three-month employment increased by 83,000 (vs. prior 147,000); June Average Earnings Index + Bonus up 4.1% yr/yr (expected 4.0%); Unemployment Rate held at 4.9% (expected 4.8%); July Claimant Count decreased 11,000 (expected 16,500); Q1 Labor Productivity up 0.5% (expected -0.5%)
- Australia: August Westpac Consumer Sentiment up 6.0% (prior 4.1%)
- China: National Bureau of Statistics expects CPI to continue rising mildly in H2; growing concerns that consumer subsidies pulled demand forward rather than creating sustainable growth
- South Korea: Reportedly discussing military cooperation with U.S. forces in the Middle East
Economic Data
- July Housing Starts: 1.239 mln vs. 1.360 mln consensus (prior revised to 1.415 mln from 1.427 mln) — down 12.4% m/m; broad-based weakness across all regions in single-unit starts
- July Building Permits: 1.443 mln vs. 1.390 mln consensus (prior revised to 1.374 mln from 1.367 mln) — up 5.0% m/m; single-unit permits up 2.5% m/m
- July Import Prices: -0.4% (prior revised to -0.3% from +0.3%); ex-oil +0.4% (prior revised to +0.1% from +0.4%); up 5.9% yr/yr (4.5% ex-oil)
- July Export Prices: -1.3% (prior revised to -0.7% from -0.6%); ex-agriculture -1.5% (prior -0.7%); up 8.2% yr/yr (8.5% ex-agriculture)
- July Industrial Production: +0.2% vs. +0.3% consensus (prior revised to +0.3% from +0.1%); led by a 0.5% rise in utilities output tied to hot-weather A/C demand
- Capacity Utilization: 76.3% (in line with consensus), up from an upwardly revised 76.2%; 3.1 percentage points below long-run average
- July Pending Home Sales: -2.3% m/m vs. +1.3% consensus (June revised to -4.8% from -5.4%)
Market impact: The weak housing data and soft pending home sales reinforced concerns over “frozen” housing conditions (echoed in Home Depot’s commentary) and helped Treasuries stage a modest afternoon rebound, though yields remained elevated given still-outsized year-over-year import/export price gains.
Looking Ahead
Economic Calendar:
- 7:00 ET: Weekly MBA Mortgage Index (prior +3.6%)
- 10:30 ET: Weekly crude oil inventories (prior +17.4 mln)
Earnings Watch: Keysight and Toll Brothers reported after Tuesday’s close and traded modestly higher in after-hours activity; further reaction will be monitored at Wednesday’s open.
Key Themes to Watch: Continued volatility in semiconductor and AI infrastructure names following Tuesday’s sharp reversal; the trajectory of long-end Treasury yields after the 30-year’s fresh 2026 high; crude oil price action amid ongoing Strait of Hormuz tensions and the stalled U.S.-Iran ceasefire talks; and further housing-sector data given the weak starts and pending home sales prints.