Stocks fell a second straight session as the bond market did the damage ahead of tomorrow's Fed decision, even as chip names clawed back some of Monday's rout.
The S&P 500 closed down 0.45% at 7,585.73, the Dow lost 328 points (-0.63%) to 52,093, and the Nasdaq Composite dropped 0.78% to 25,981 as the 10-year Treasury yield spiked intraday to 5.04%, its highest print since 2007. The move was fed by crude, with Brent near $108 and WTI near $105 after Saudi Arabia shuttered its East-West pipeline and Houthi strikes hit the Middle East again, keeping the inflation impulse alive right into the FOMC.
Energy (+1.9%) and Materials (+0.3%) were the only sectors green; Discretionary and Utilities each lost more than 1% as duration-sensitive and consumer-linked names took the yield spike on the chin. Underneath the index, mega-cap AI supply chain names bounced back from Monday's swoon — AMD and Coherent up roughly 2%, Qualcomm up over 4% — a pocket of relative strength that kept the tape from being a straight risk-off wipeout. Price closed near session lows, tape action consistent with dealers short gamma into a binary catalyst, so expect levels to compress and whip once the print lands.
The risk: tomorrow's 2pm ET FOMC decision, where a 25bp hike to 3.75-4.00% is priced near 90%, makes the dot plot and Warsh's 2:30 presser the real event — a hawkish skew or a Warsh dot ends the AI-bounce relief fast, while any dovish framing of oil as transitory could spark a violent short-covering rally through the flip.