S&P 500 Rebounds as AMD Crushes Earnings — ISM Services Slips Below 50 for First Time in 2026

The S&P 500 clawed back most of Monday’s losses on Tuesday, rising 0.35% to close at 7,226.54 as buyers emerged on every dip despite a disappointing ISM Services print that briefly spooked sentiment in the morning session. The real fireworks came after the bell, however — AMD delivered a blowout quarter that sent shares surging 6% in extended trading, signaling the AI infrastructure boom remains firmly intact.

The session played out in two distinct acts. An early selloff triggered by the ISM Services PMI falling below 50 for the first time in 2026 gave way to steady accumulation as oil prices retreated sharply on easing Strait of Hormuz tensions, providing a relief valve for inflation-sensitive investors. By 2:00 PM, the index had reclaimed the morning’s gap and never looked back.

Breadth was constructive: advancers outpaced decliners by nearly 2-to-1 on the NYSE, with 9 of 11 S&P 500 sectors closing higher. Pinterest surged 14% on its earnings blowout, while eBay’s formal rejection of GameStop’s $56 billion bid dominated the corporate newswire.

Closing Scoreboard

What Happened

Tuesday’s session tested the market’s resolve early. The ISM Services PMI printed at 49.8, below both the 50.6 consensus and the psychologically important 50 threshold that separates expansion from contraction. It was the first sub-50 reading since December 2024, and for roughly 45 minutes between 10:00 and 10:45 AM, sellers had the upper hand — the S&P dipped as low as 7,186 before finding its footing.

What turned the tape was oil. WTI crude plunged over 4% as the first U.S. Navy escorts under Project Freedom transited the Strait of Hormuz without incident overnight, deflating the geopolitical risk premium that had built into energy markets over the past two weeks. With crude dropping below $102, the market effectively re-priced the inflation pass-through from the Hormuz standoff, giving equity bulls the green light.

The recovery was methodical rather than frantic. Unlike the sharp V-bottom rallies of recent weeks, Tuesday’s grind higher featured steady institutional accumulation in mega-cap tech and rate-sensitive names. Volume ran slightly below average at 10.8 billion shares across exchanges, suggesting this was more about positioning ahead of after-hours earnings than conviction buying.

Mega-Cap and Key Movers

Sector Breakdown

Energy was the clear laggard as the Hormuz de-escalation narrative hammered producers. XLE fell 2.74% with exploration & production names like Devon Energy (−4.1%) and Pioneer Natural Resources (−3.8%) leading declines. Communication Services topped the leaderboard, boosted by Pinterest’s 14% surge and Meta’s 0.9% gain on positive ad-market read-throughs from Pinterest’s results.

Global Markets

Asia-Pacific

Asian markets were mixed overnight. Japan’s Nikkei 225 rose 0.6% to 38,942 as yen weakness persisted, while Hong Kong’s Hang Seng slipped 0.3% on continued property sector concerns. The Shanghai Composite edged up 0.2%, supported by state fund purchases ahead of the Lunar holiday-extended week. Australia’s ASX 200 gained 0.4% on materials strength.

Europe

European markets closed solidly higher. The STOXX 600 gained 0.58% with defense names leading after NATO ministers discussed expanded Persian Gulf security cooperation. Germany’s DAX rose 0.72% to 22,847, while London’s FTSE 100 added 0.44% to 8,612. France’s CAC 40 rose 0.51%. European energy stocks underperformed, mirroring the U.S. dynamic as Brent crude fell below $105.

Fixed Income and Commodities

Treasury yields ticked modestly higher as the risk-on session reduced demand for haven assets. The 10-year yield settled at 4.41%, up 2 basis points, while the 2-year rose 1 basis point to 3.89%. The 2s/10s curve steepened slightly to +52 bps as long-end yields responded to the ISM miss — weak services data paradoxically lifted rate-cut expectations for the September FOMC meeting.

CME FedWatch now prices 38% odds of a 25 bps cut in September, up from 32% on Friday. The weak ISM print reinforced the narrative that economic momentum is fading even as headline inflation remains sticky from energy prices.

The dollar index (DXY) slipped 0.14% to 118.22, weighed by the dovish rates repricing. Copper rose 0.7% on hopes that lower energy costs would support industrial activity, while natural gas fell 1.2% on mild weather forecasts.

Corporate News

eBay Formally Rejects GameStop’s $56B Bid

eBay’s board of directors unanimously rejected GameStop’s unsolicited $56 billion acquisition proposal, calling it “inadequate, highly conditional, and not in the best interests of shareholders.” The statement highlighted concerns about GameStop’s ability to finance the all-stock deal and noted the offer significantly undervalued eBay’s marketplace business and advertising platform potential. GameStop shares extended their Friday decline, falling another 6% to $22.41, while eBay pulled back 2% after its initial spike last week.

KKR Posts Strong Q1

KKR reported assets under management of $624 billion, up 14% year-over-year, with fundraising of $37 billion in Q1 beating estimates of $32 billion. Management fee-related earnings rose 18%, and the firm raised its full-year deployment target. Shares rose 2.3%.

Analyst Actions

• Nvidia — Goldman Sachs reiterated Buy, raised PT to $1,300 from $1,200 citing AMD’s AI demand confirmation
• Pinterest — JPMorgan upgraded to Overweight from Neutral, PT $58 (from $42)
• ExxonMobil — Citi downgraded to Neutral from Buy citing reduced geopolitical premium in oil
• Palantir — Morgan Stanley maintained Equal Weight, lowered PT to $135 from $150 on guidance concerns

Economic Data

The ISM Services miss was the headline event. The index fell 1.6 points to 49.8, marking the first contraction in the services sector since December 2024. The new orders sub-index plunged to 47.2 from 50.8, while the employment component held at 50.1 — barely expansionary. Business activity fell to 49.4, and prices paid actually dipped to 58.2 from 60.9, a modest silver lining for inflation hawks.

JOLTS job openings came in slightly below consensus at 7.44 million versus 7.50 million expected. The quits rate held steady at 2.1%, suggesting workers aren’t fleeing their jobs but also aren’t finding greener pastures. The data is consistent with a gradually cooling labor market rather than a cliff-edge deterioration.

After-Hours Movers

AMD was the clear standout. The chipmaker’s data center revenue surged 62% year-over-year to $4.1 billion, driven by MI300X GPU accelerator demand from hyperscalers. Management raised full-year data center AI revenue guidance to $12 billion from $10 billion, noting “unprecedented demand visibility extending into 2027.” Client and gaming segments also beat expectations.

Shopify delivered another strong quarter, with gross merchandise volume growing 28% to $74.3 billion. The company raised its full-year revenue growth guidance to 24–26% from 22–24%, citing strength in enterprise merchants and international expansion.

The AlphaEdge Take

Tuesday confirmed what Monday’s pullback suggested: this market wants to go higher, and it’s using every dip as an entry point. The ISM Services miss was the kind of data point that would have triggered a 1–2% selloff six months ago. Instead, the market absorbed it in 45 minutes and moved on. That’s telling.

The more important signal is the rotation beneath the surface. Oil’s 4.3% plunge on the successful Hormuz transit removes the single biggest inflation wildcard that has haunted this market since late April. If crude can sustain below $105 through the week, the “energy tax on consumers” narrative that bears have been building simply evaporates. That opens the door for the Fed to focus on the softening employment data when making its June decision.

AMD’s after-hours results are the cherry on top. A 62% data center AI growth rate with raised guidance tells you the capex cycle is nowhere near peaking. This will flow through to Nvidia, Broadcom, and the entire AI supply chain when regular trading opens Wednesday. Expect the Nasdaq to lead.

The risk? That ISM Services miss isn’t a one-off. If next month’s print confirms a services contraction, the “soft landing” thesis gets very complicated very fast. For now, though, the path of least resistance is higher. We’re looking for the S&P 500 to retest 7,250 this week, with AMD’s blowout providing the catalyst for tech leadership to resume.