Semiconductor Strength Lifts Nasdaq to Records as Financials Weigh on Broader Market

The major averages finished mixed on Tuesday as continued strength in semiconductor stocks and improving participation beneath the surface offset pronounced weakness in financials and several pockets of the large-cap market. The S&P 500 ended unchanged following Monday’s sizable advance, while the Nasdaq Composite gained 0.5% and reached fresh record highs. The Dow Jones Industrial Average fell 0.4%, while the Russell 2000 rose 0.5% and the S&P MidCap 400 advanced 0.3%.

Semiconductor stocks remained the clearest source of support throughout the session. The PHLX Semiconductor Index climbed 2.1%, helping information technology (+0.6%) rank among the better-performing S&P 500 sectors. Memory stocks again displayed pronounced strength, extending the powerful momentum that has recently accompanied enthusiasm surrounding AI infrastructure and data-center investment.

Chip stocks reached fresh highs during the session as investors also digested President Donald Trump’s remarks on artificial intelligence during his address to the United Nations General Assembly. Trump reiterated his administration’s opposition to international restrictions on AI development, describing the technology as “Super Intelligence” and rejecting efforts to establish a global governance framework around it.

The broader mega-cap picture was less supportive than on Monday, however. Communication services (-1.0%) finished among the session’s weakest sectors after trading higher early in the day, limiting the benefit of semiconductor strength for the market-cap-weighted S&P 500.

That divergence was reflected in the stronger performance of smaller companies. The Russell 2000 and S&P MidCap 400 both comfortably outperformed the S&P 500, suggesting that participation beneath the headline indexes improved even as several heavyweight large-cap stocks struggled.

Financials (-1.6%) represented the most significant drag throughout the session. Selling extended across banks, regional lenders, insurers, and asset managers amid increased attention to a flattening yield curve, technical weakness across several financial-industry groups, and concerns surrounding softer trading and investment-banking activity.

Charles Schwab (SCHW 100.35, -6.53, -6.11%), Allstate (ALL 229.36, -13.50, -5.56%), and Wells Fargo (WFC 83.16, -3.38, -3.91%) were among the most heavily pressured names. The group’s weakness weighed particularly heavily on the Dow and contributed substantially to its underperformance.

Allstate faced an additional source of pressure amid concerns that increasingly capable AI agents could disrupt traditional consumer-service channels. Meta Platforms (META 736.60, -4.65, -0.63%) remained in focus as its Muse AI agent continued attracting attention for its ability to assist users with consumer services, including insurance searches.

Expedia Group (EXPE 280.70, -0.32, -0.11%) initially came under pressure from similar concerns before recovering much of its decline after announcing a partnership with Muse designed to bring AI-powered trip planning to hotels and other travel offerings.

Strength elsewhere in the market was relatively broad. Materials (+1.9%) and consumer staples (+1.2%) finished atop the sector standings, while health care (+0.6%) also outperformed. Moderna (MRNA 182.56, +9.62, +5.56%) extended its recent surge, climbing another 5.6% to fresh multi-year highs.

Homebuilders represented another notable pocket of strength. The iShares U.S. Home Construction ETF jumped 3.2%, while Lennar (LEN 83.05, +4.97, +6.37%) remained a standout performer after Berkshire Hathaway increased its stake in the company.

Crude oil ultimately finished lower despite recovering substantially from its overnight decline. WTI futures fell $0.56, or 0.6%, to settle at $95.21 per barrel as investors assessed the possibility of renewed diplomatic engagement between the United States and Iran.

President Trump said Tuesday that U.S. and Iranian officials had held a three-hour meeting that went “very well,” while indicating that additional talks were expected. The meeting followed his address to the UN General Assembly and added another potential diplomatic variable for an oil market that has been highly sensitive to developments surrounding the conflict.

Movements in crude were mirrored to some extent in the Treasury market. Oil’s overnight decline initially helped pull yields lower, with the 2-year Treasury yield reaching 4.71% and the 10-year yield falling to 4.92%. Those moves subsequently reversed as crude recovered during the session.

The 2-year yield ultimately finished unchanged at 4.75%, while the 10-year Treasury yield rose one basis point to 4.97%. The resulting flattening of the yield curve remained an important consideration for financial stocks and helped explain some of the pronounced weakness across the sector.

Tuesday’s session ultimately highlighted a sharp divide beneath the major averages. Semiconductor stocks continued to push higher and the Nasdaq reached fresh records, while gains among small- and mid-cap stocks pointed to healthier participation outside the largest technology companies. At the same time, substantial weakness in financials and communication services prevented those gains from translating into a broader large-cap advance.

That combination left the S&P 500 essentially unchanged following Monday’s strong rally, while semiconductor leadership propelled the Nasdaq to another record. With the 10-year Treasury yield hovering just below 5% and crude oil remaining sensitive to diplomatic developments surrounding Iran, interest rates and energy prices remain important macro variables even as AI and semiconductor momentum continues to provide a powerful source of support for the technology sector.

Our FTinvest 11 model portfolio rebounded 1.65% to close at 943.74, recovering from Monday’s decline that had brought the portfolio almost exactly back to its start-of-year level. Despite today’s solid advance, FTinvest 11 remains firmly in correction territory, standing approximately 13.9% below its all-time closing high of 1,096.33 and still well below the 1,000 level.

FTinvest 11 is now up approximately +1.68% year-to-date, rebuilding a modest positive return after coming within just 0.03% of breakeven yesterday. Today’s rebound provides some relief following the sustained September selloff, although a meaningful portion of the portfolio’s summer gains remains unrecovered. FTInvest 11 continues to navigate the current correction while maintaining its disciplined, value-driven focus on long-term capital appreciation.