Stocks Drift Lower as Oil Climbs and Mega-Cap Tech Weakens Ahead of CPI

Stocks finished lower on Tuesday as rising oil prices, weakness across most mega-cap technology stocks, and caution ahead of Wednesday’s July Consumer Price Index report gradually weighed on sentiment. The S&P 500 declined 0.3%, the Nasdaq Composite fell 0.6%, and the Dow Jones Industrial Average lost 0.3% after all three major averages spent the early portion of the session hovering near unchanged levels.

Trading was subdued during the first two hours as a relatively light corporate news calendar left investors focused on geopolitical developments and the upcoming inflation report. Crude oil initially retreated from its overnight highs after Bloomberg reported that Pakistan’s Defense Minister Khawaja Asif said the U.S. and Iran were close to reaching “some sort of an arrangement.” Optimism faded later in the morning, however, as reports reiterated that Iran’s conditions would need to be met before it would agree to reopen the Strait of Hormuz.

Stocks began drifting lower as crude resumed its advance. WTI futures ultimately settled $1.00 higher, or 1.2%, at $83.17 per barrel, helping the energy sector gain 1.1% and finish among the day’s strongest S&P 500 groups.

Although pockets of weakness appeared throughout the broader market, selling was considerably more pronounced among mega-cap growth stocks. The Vanguard Mega Cap Growth ETF declined 0.7%, highlighting the pressure from several of the market’s largest companies.

Communication services was the weakest S&P 500 sector, falling 2.1%, as Alphabet (GOOG 343.00, -12.84, -3.61%) suffered a particularly sharp decline. Amazon (AMZN 272.27, -5.82, -2.09%) also came under pressure, contributing to a 0.8% loss in the consumer discretionary sector.

Within information technology (-0.3%), software stocks gave back some of Monday’s gains. Oracle (ORCL 145.44, -5.60, -3.71%) and AppLovin (APP 318.68, -20.32, -5.99%) were among the more notable laggards.

Semiconductor stocks provided a relative bright spot, although their early momentum faded considerably. The PHLX Semiconductor Index gained 0.9% but closed well below its session highs. NVIDIA (NVDA 217.48, -0.07, -0.03%) surrendered its entire opening advance and finished essentially unchanged after initially rebounding from Monday’s late selloff.

NVIDIA’s recent volatility followed news of an initiative involving several major asset managers aimed at mobilizing as much as $500 billion for AI computing infrastructure. KKR (KKR 111.02, +7.18, +6.92%) and Apollo Global Management (APO 140.24, +8.22, +6.23%), both participants in the initiative, ranked among Tuesday’s strongest-performing S&P 500 components.

Industrials (+0.6%) also benefited from strength in semiconductor-related electrical equipment names. Axon Enterprise (AXON 636.31, +39.98, +6.70%) was another standout, recovering a portion of its steep post-earnings decline from last week.

Utilities gained 1.1%, matching energy for the strongest sector performance as investors showed renewed interest in defensive areas amid weakness across mega-cap technology stocks.

Despite eight of the 11 S&P 500 sectors finishing lower, the underlying market performed better than the headline indices suggested. The S&P 500 Equal Weight Index gained 0.3%, while advancing stocks outnumbered decliners on both the NYSE and Nasdaq. Smaller and mid-cap stocks also outperformed, with the Russell 2000 and S&P MidCap 400 each gaining 0.3%.

That divergence reinforced the concentrated nature of Tuesday’s weakness. Rather than signaling a broad retreat from equities, the decline in the major averages was driven disproportionately by several heavyweight growth stocks.

Still, below-average trading volume and the pullback in mega-cap technology pointed to a degree of caution ahead of Wednesday’s July CPI report. The Briefing.com consensus calls for a 0.1% monthly increase.

The inflation reading could prove pivotal for expectations surrounding the Federal Reserve’s next move. The CME FedWatch Tool currently assigns roughly even odds to a rate hike or no change at the September FOMC meeting. With oil prices climbing again and inflation remaining central to the policy debate, Wednesday’s CPI report could determine whether expectations tilt more decisively toward renewed tightening or an extended pause.

Our FTinvest 11 model portfolio gained 0.64% to close at 1,069.83, breaking out of the narrow trading range that characterized recent sessions and restoring some positive momentum. The portfolio remains comfortably above the 1,000 level and is now approximately 2.4% below its all-time closing high of 1,096.33, bringing record territory back within closer reach.

FTinvest 11 is now up approximately +15.26% year-to-date, maintaining a strong double-digit return for 2026. After several sessions of minimal movement, today’s advance represents an encouraging shift from consolidation toward renewed upward momentum. The portfolio continues to preserve the majority of the gains achieved during its strong summer recovery while remaining focused on its disciplined, value-driven approach to long-term capital appreciation.