The major averages finished lower today, slipping back toward their session lows as semiconductor weakness and rising oil prices weighed on sentiment. The S&P 500 (-0.5%), Nasdaq Composite (-1.2%), and DJIA (-0.3%) all ended lower, while the Russell 2000 (-0.9%) and S&P Mid Cap 400 (-1.2%) faced even sharper losses.

Semiconductor stocks remained under pressure after Samsung Electronics' preliminary second-quarter results sparked renewed profit-taking across the group. While Samsung reported operating profit that was more than 1,800% higher than a year ago, revenue came in just shy of elevated expectations, reinforcing concerns that much of the optimism surrounding the semiconductor industry may already be reflected in valuations.

The PHLX Semiconductor Index fell 4.7%, as names such as Teradyne (TER 343.11, -36.41, -9.59%) and Intel (INTC 110.39, -11.81, -9.66%) were among the worst-performing S&P 500 components. The weakness weighed heavily on the information technology sector (-1.6%), though losses were not uniform across mega-cap technology.

NVIDIA (NVDA 196.93, +1.38, +0.71%) managed to finish higher, but the Vanguard Mega Cap Growth ETF still declined 0.9%, reflecting broader pressure across several large growth names.

The industrials sector (-1.7%) also lagged as electrical equipment names including Generac (GNRC 235.76, -22.05, -8.55%) continued to move in tandem with semiconductor stocks.

The consumer discretionary sector (-0.4%) finished lower as Tesla (TSLA 402.90, -16.87, -4.02%) fell sharply, while cruise lines and other oil- and rate-sensitive stocks came under pressure amid the surge in oil prices.

The energy sector (+3.0%) was the clear standout as geopolitical tensions pushed crude oil sharply higher. Crude oil futures settled today's session $1.93 higher (+2.8%) at $70.48 per barrel following reports of attacks on three separate ships in the Strait of Hormuz. Oil prices continued to climb after the settlement after CNBC reported, citing a U.S. official, that the Treasury Department is revoking the waiver allowing Iran to sell its oil in response to the strikes.

The communication services sector (+0.6%) was another relative bright spot, supported by broad gains across its components. Meta Platforms (META 615.58, +15.29, +2.55%) was a mega-cap standout after announcing the release of Muse Image, the first image generation model from Meta Superintelligence Labs.

Defensive sectors continued to hold up relatively well, with the health care (+1.6%), utilities (+0.9%), consumer staples (+1.0%), and real estate (+1.5%) sectors maintaining much of their midday strength as investors rotated away from semiconductor stocks.

Today's session reflected a somewhat more cautious tone than was evident earlier in the day. Semiconductor stocks remained the primary source of pressure, while the late-day surge in oil prices added another headwind for smaller-cap stocks and other economically sensitive areas of the market.

Even so, the broader market once again benefited from rotational buying, allowing the S&P 500 to close above the 7,500 level (7,503.85) after spending much of the session below that key technical mark. That resilience has become a defining theme to start the month, with the S&P 500 up 0.1% since the beginning of July despite the PHLX Semiconductor Index falling 13.7% over the same period, underscoring that strength elsewhere in the market continues to offset the semiconductor group's pullback.

U.S. Treasuries retreated on Tuesday, giving back their slim gains from the start of the week and finishing on lows even though the Treasury launched this week's note and bond auction slate with a solid $58 billion 3-year note sale. The 2-year note yield settled up four basis points to 4.16%, and the 10-year note yield settled up five basis points to 4.53%.

• Russell 2000: +20.2% YTD
• S&P Mid Cap 400: +14.2% YTD
• Nasdaq Composite: +11.1% YTD
• DJIA: +10.1% YTD
• S&P 500: +9.6% YTD 

Reviewing today's data:

• May Trade Balance -$77.6 bln (Briefing.com consensus -$78.8 bln); Prior was revised to -$54.6 bln from -$55.9 bln
  • The key takeaway from the report is that it reflected stronger demand for goods in the U.S. versus elsewhere, evidenced by the wide gap between exports and imports in May.