Stocks Mixed on Chipmaker Weakness and Easing US Price Pressures

The S&P 500 Index ($SPX) (SPY) today is down -0.08%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.24%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.97%.  September E-mini S&P futures (ESU26) are down -0.04%, and September E-mini Nasdaq futures (NQU26) are down -0.95%. 

Stock indexes are mostly lower today as chipmakers and AI stocks fall back after their sharp rally over the past two sessions.  Weaker-than-expected US economic news also weighed on stocks after the Jun ADP employment change rose less than expected and the Jun ISM manufacturing index fell more than expected. 

However, stock indexes recovered from their worst levels and are trading mixed as software stocks rallied and US factory price pressures eased after the Jun ISM prices paid sub-index fell more than expected to a 4-month low.  Stocks also found support after Fed Chair Warsh said price risks have come down in recent weeks and that he is determined to bring inflation back down to the Fed’s 2% target.

US MBA mortgage applications were unchanged in the week ended June 26, with the purchase mortgage sub-index up +0.5% and the refinancing mortgage sub-index down -0.7%.  The average 30-year fixed rate mortgage fell -2 bp to 6.57% from 6.59% in the prior week.

The US Jun ADP employment change rose by +98,000, showing a weaker labor market than expectations of +120,000.

The US Jun ISM manufacturing index fell -0.7 to 53.3, weaker than expectations of 53.9.  The Jun ISM prices paid sub index fell -9.1 to a 4-month low of 73.0, weaker than expectations of 77.5.

The outlook for strong Q2 earnings is a bullish factor for stocks. Forecasts compiled by Bloomberg Intelligence suggest Q2 earnings may increase by 23%, close to Q1’s blowout earnings of 30%, which was more than double the 12% analysts had expected.  AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2.   

WTI crude oil (CLQ26) is down more than -1% today and posted a 4.25-month low.  Crude prices came under pressure today after a senior US administration official said that US negotiators held positive discussions in Qatar and progress is being made on technical talks with Iran.  Also, the Wall Street Journal reported that President Trump had decided against resuming a broad military campaign against Iran and told his staff that he didn't mind if the negotiations extended beyond the August 18 deadline.  Energy supplies are picking up as Morgan Stanley said 35 oil and gas tankers exited the Persian Gulf through the Strait of Hormuz last Thursday, the first time the level returned to the 30-to-40 range typical before the US-Iran war started in February.

The markets are discounting a 29% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is down -0.76%.  China's Shanghai Composite climbed to a 1-week high and closed up +0.4%.  Japan's Nikkei-225 Stock Average closed up +0.59%.

Interest Rates

September 10-year T-notes (ZNU6) on Tuesday are down -6 ticks, and the 10-year T-note yield is up +3.9 bp to 4.459%.  T-notes are sliding today amid strengthening inflation expectations after the 10-year breakeven inflation rate rose to a 1-week high of 2.255%.  Losses in T-notes are limited after the Jun ADP employment change and the Jun ISM manufacturing index came in below expectations.  Also, some short covering emerged in T-notes after Fed Chair Warsh said price risks have come down in recent weeks and that he is determined to bring inflation back down to the Fed’s 2% target.

European government bond yields are moving higher today.  The 10-year German bund yield is up +2.5 bp to 2.884%.  The 10-year UK gilt yield rose to a 1-week high of 4.817% and is up +2.0 bp to 4.776%.

Eurozone Jun CPI eased to 2.8% y/y from 3.2% y/y in May, weaker than expectations of 3.0% y/y.  Jun core CPI eased to 2.4% y/y from 2.6% y/y in May, weaker than expectations of 2.5% y/y.

The Eurozone Jun S&P manufacturing PMI was revised upward by +0.1 to 51.4 from the previously reported 51.3.

ECB President Christine Lagarde said that risks to inflation and growth are now more broadly balanced than a few weeks ago, due to the recent slide in crude oil prices.

Swaps are discounting a 5% chance of a +25 bp ECB rate hike at its next policy meeting on July 23.

US Stock Movers

Chipmakers and AI infrastructure stocks are under pressure today, leading the broader market lower.  SanDisk (SNDK) is down more than -10%, and KLA Corp (KLAC) and Lam Research (LRCX) are down more than -9%.  Also, Applied Materials (AMAT), Micron Technology (MU), and Intel (INTC) are down more than -8%, and Western Digital (WDC) is down more than -7%.  In addition, Seagate Technology Holdings Plc (STX) and Marvell Technology (MRVL) are down more than -6%, and Advanced Micro Devices (AMD), ARM Holdings Plc (ARM), and ASML Holding NV (ASML) are down more than -5%. 

Nebius Group NV (NBIS) is down more than -16% to lead losers in the Nasdaq 100, and CoreWeave (CRWV) is down more than -14% as cloud-computing stocks are falling on news that Meta Platforms is developing plans for a cloud infrastructure business to sell access to AI computing power and models.

Software stocks are climbing today, a positive factor for the overall market.  Palantir Technologies (PLTR) is up more than +9%, and Atlassian Corp (TEAM) is up more than +8%.  Also, ServiceNow (NOW) and Workday (WDAY) are up more than +6%, and Salesforce (CRM) is up more than +5% to lead gainers in the Dow Jones Industrials.  In addition, Autodesk (ADSK) and Intuit (INTU) are up more than +4%, and Microsoft (MSFT), Datadog (DDOG), and Adobe Systems (ADBE) are up more than +3%.

Alcoa (AA) is down more than -10% after agreeing to acquire South32 Ltd.’s bauxite, alumina, and aluminum assets in a deal worth as much as $5.6 billion. 

Caterpillar (CAT) is down more than -5% to lead losers in the Dow Jones Industrials after Scion Asset Management founder Michal Burry said he shorted Caterpillar shares for the first time. 

Kroger (KR) is down more than -2% after agreeing to acquire Giant Eagle Inc. for about $1.65 billion. 

Meta Platforms (META) is up more than +11% to lead gainers in the S&P 500 and Nasdaq 100 after saying it is developing plans for a cloud infrastructure business to sell access to AI computing power and models.

General Mills (GIS) is up more than +8% after reporting Q4 adjusted EPS of 95 cents, stronger than the consensus of 80 cents. 

FactSet Research Systems (FDS) is up more than +6% after reporting Q3 adjusted EPS of $4.53, better than the consensus of $4.43. 

Fox Corp (FOXA) is up more than +5% after Wolfe Research upgraded the stock to outperform from peer perform.

MSC Industrial Direct (MSM) is up more than +4% after forecasting Q4 average daily sales up +6.5% to +8.5%, the midpoint above the consensus of +6.99%. 

Earnings Reports(7/1/2026)

FactSet Research Systems Inc (FDS), Franklin Covey Co (FC), General Mills Inc (GIS), Greenbrier Cos Inc/The (GBX), MSC Industrial Direct Co Inc (MSM), UniFirst Corp/MA (UNF).