Stock Indexes Fall as Chipmakers Retreat

The S&P 500 Index ($SPX) (SPY) today is down -0.19%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.43%.  September E-mini S&P futures (ESU26) are down -0.25%, and September E-mini Nasdaq futures (NQU26) are down -1.50%. 

Stock indexes are mixed today, with the Dow Jones Industrials posting a new all-time high.  The broader market is under pressure today, led by weakness in chipmakers, after blowout earnings from Samsung Electronics failed to impress.  Samsung, the world’s largest memory maker by market value, closed down more than -8% in South Korea today even after profit surged 19-fold. Semiconductor stocks are facing heightened scrutiny amid lofty valuations as investors question whether hundreds of billions of dollars in spending on artificial intelligence can be sustained.  However, strength in software stocks is a supportive factor for the overall market. 

Also weighing on stocks is a jump in crude oil prices following attacks on shipping in and around the Strait of Hormuz, highlighting continued risks to vessels in the region.  Higher crude prices have also raised inflation expectations and boosted bond yields, as the 10-year T-note yield climbed to a 2-week high of 4.51% today. 

Today’s US trade news was bearish for stocks after the US May trade deficit widened to -$77.6 billion, the largest deficit in 14 months and a negative factor for Q2 GDP.

Comments today from New York Fed President John Williams were slightly hawkish for Fed policy, as he said inflation is still quite high and that he sees steady economic growth and labor market stability.

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 up more than +1% today following attacks on shipping in and around the Strait of Hormuz. Axios reported that a Qatari LNG gas carrier was hit by a projectile and a laden Saudi oil tanker suffered damage near the Omani coast as they exited the Strait of Hormuz.  Axios also reported earlier that Iran fired at least two missiles at commercial ships transiting through the strait.

The markets are discounting a 26% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.

Overseas stock markets are lower today.  The Euro Stoxx 50 is down -0.53%.  China's Shanghai Composite fell to a 3.5-week low and closed down -1.26%.  Japan's Nikkei-225 Stock Average closed down -2.12%.

Interest Rates

September 10-year T-notes (ZNU6) today are down -4 ticks, and the 10-year T-note yield is up +3.0 bp to 4.499%.  Sep T-notes are falling today, and the 10-year T-note yield rose to a 2-week high of 4.507%.  Today’s +1% increase in WTI crude oil prices has boosted inflation expectations and is weighing on T-note prices.  Also, supply pressures are weighing on T-notes, as the Treasury will auction $119 billion in T-notes and T-bonds this week, beginning with a $58 billion auction of 3-year T-notes later today.

European government bond yields are moving higher today.  The 10-year German bund yield climbed to a 2-week high of 2.985% and is up +2.7 bp to 2.974%.  The 10-year UK gilt yield rose to a 2-week high of 4.831% and is up +1.6 bp to 4.809%.

German May industrial production rose +0.9% m/m, stronger than expectations of +0.1% m/m and the largest increase in 8 months.

Swaps are discounting a 4% 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 retreating today after Samsung Electronics reported preliminary earnings results that failed to meet high expectations.  The iShares Semiconductor ETF (SOXX) is down more than -2%.  Applied Materials (AMAT) is down more than -8% to lead losers in the S&P 500 and Nasdaq 100, and Sandisk (SNDK), Lam Research (LRCX), and Intel (INTC) are down more than -7%.  Also, Western Digital (WDC) and Advanced Micro Devices (AMD) are down more than -6%, and KLA Corp (KLAC), Micron Technology (MU), and Marvel Technology (MRVL) are down more than -5%.  In addition, ASML Holding NV (ASML), ARM Holdings Plc (ARM), Microchip Technology (MCHP), Seagate Technology Holdings Plc (STX), and Texas Instruments (TXN) are down more than -4%, and ON Semiconductor (ON), Analog Devices (ADI), and NXP Semiconductors NV (NXPI) are down more than -3%.

Software stocks are moving higher today, a supportive factor for the broader market.  Thomson Reuters (TRI) is up more than +5% to lead gainers in the Nasdaq 100, and Workday (WDAY) is up more than +3%.  Also, Atlassian Corp (TEAM) and Autodesk (ADSK) are up more than +2%, and Adobe Systems (ADBE), Intuit (INTU), Microsoft (MSFT), Palantir Technologies (PLTR)

Salesforce (CRM), and ServiceNow (NOW) are up more than +1%.

Rivian Automotive (RIVN) is down more than -12% after offering to sell 75 million shares to fund equity contributions to a US Department of Energy loan.

Crinetics Pharmaceuticals (CRNX) is up more than +98% after Vertex Pharmaceuticals entered into a definitive agreement to buy the company for about $10 billion, or $85 per share. 

Figma (FIG) is up more than +4% after Bank of America Global Research upgraded the stock to buy from neutral with a price target of $30. 

Fiserv (FISV) is up more than +3% after the Wall Street Journal reported that several banks have held preliminary discussions about a deal to acquire a debit network owned by the company.

Earnings Reports(7/7/2026)

Enerpac Tool Group Corp (EPAC), Enovix Corp (ENVX), Kura Sushi USA Inc (KRUS), MarketAxess Holdings Inc (MKTX), Penguin Solutions Inc (PENG).