SG Morning Brief | Dow Plunges 1,153 Points on Fed Hawks and Bond Yield Spike; Microsoft and Meta Diverge After Hours

US Overnight

The Dow plunged 1,153.18 points (-2.19%) to 51,594.14, its worst day since April 2025. The S&P 500 fell 1.52% to 7,316.15, and the Nasdaq dropped 1.74% to 24,442.94 — now more than 10% below its all-time high. Three forces converged: the Iran conflict reignited as US strikes entered their fourteenth day, the Fed held rates but with a hawkish tilt that spooked the bond market, and SK Hynix's Q2 profit came in below Wall Street expectations, deepening doubts about AI demand. The 30-year Treasury yield surged 10 basis points above 5.2%, its highest level of 2026, signaling that the bond market believes the Fed is falling behind on inflation. The SOX plunged over 5%.

FOMC: Hawkish Hold, Three Dissenters

The Fed held rates at 3.50-3.75% as expected, but three FOMC members — Hammack (Cleveland), Kashkari (Minneapolis), and Logan (Dallas) — voted for a 25-basis-point hike. The statement acknowledged the economy "is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East." Chair Warsh told reporters the Fed "will not hesitate" to act on inflation. Markets briefly rallied during Warsh's press conference then sold off violently into the close as the 30-year yield broke above 5.2%. The message: holding rates while inflation re-accelerates on $96 oil and the 30-year yield hits a year high may prove to be the wrong call.

Key Movers

Chips: SOX -5%, AMD -5.5%, Intel -5%+, Nvidia -3.6% — The semiconductor rout intensified after SK Hynix reported Q2 profits that surged but fell short of elevated expectations, reigniting AI demand doubts. AMD dropped 5.51%, Intel fell over 5%, and Nvidia declined 3.55%. The SOX is now down roughly 30% from its June record.

After hours: Microsoft initially surged, Meta initially plunged — The most extreme after-hours divergence of the quarter. Microsoft jumped as much as 8% after reporting results that showed Azure AI revenue accelerating and AI spending translating into margin improvement — the exact signal the market had been demanding all earnings season. Meta dropped as much as 8% after raising its capex outlook further, compounding the Alphabet-style capex shock. Qualcomm fell as much as 5% on a weaker outlook. All three were still moving at time of writing; Asian markets will react to wherever they settle at the open.

SGX Preview

The STI was near 5,070. DBS near S$62.18, UOB near S$37.91. The 30-year yield above 5.2% and Dow's 1,153-point drop are major headwinds for Asian risk assets. Singapore banks face a complex signal: three Fed members wanted to hike (positive for NIM) but the economic uncertainty from $96 oil weighs on growth. Microsoft's 8% surge partially offsets the Meta disappointment for tech sentiment. Tonight's Amazon and Apple earnings will determine whether the selloff extends or reverses.

Asia Pre-Market

Futures are mixed: Nasdaq 100 futures are modestly higher (+0.3%) as Microsoft's 8% rally offsets Meta's 8% decline. The bond market is the real story — the 30-year above 5.2% has repriced the entire rate landscape. Gold likely caught a safe-haven bid. Oil remains near $96 as the Iran conflict intensifies.

Today's US Earnings and Economic Calendar

Friday: Core PCE (June).

Earnings Spotlight: Amazon + Apple Tonight — Microsoft proved that AI spending CAN translate into margin improvement. Meta proved it doesn't always. Tonight Amazon's AWS and Apple's iPhone/services results will break the tie. Amazon's capex trajectory is the key variable — if AWS follows Microsoft's playbook of spending efficiently, the AI capex panic may be overdone. Apple's $5-trillion-market-cap consumer franchise is the ultimate safety trade in a week where the SOX has lost 30% from its peak.

One More Thing

Three Fed members voted to hike while the 30-year yield broke above 5.2%. That combination is a warning. The bond market is telling you inflation is not under control, and a third of the voting FOMC members agree. Warsh held, but "will not hesitate" is not reassurance — it is a threat. Microsoft's 8% after-hours surge is the single best piece of news this week: one company proved that AI capex can generate returns, not just costs. If Amazon and Apple confirm that tonight, the correction finds a floor. If they don't, the 30-year at 5.2% becomes the story of Q3.

This briefing is for informational purposes only and does not constitute investment advice.