Stocks Slip Before the Open as Chipmakers Extend Slide, U.S. Retail Sales Data and Earnings on Tap

September S&P 500 E-Mini futures (ESU26) are down -0.17%, and September Nasdaq 100 E-Mini futures (NQU26) are down -0.59% this morning as chipmakers remained under pressure, with investors weighing whether earnings justify further gains in the AI trade.

Taiwan Semiconductor Manufacturing Co. (TSM), the world’s largest contract chipmaker, reported its fifth consecutive quarter of record earnings and raised its full-year revenue growth forecast. However, that was not enough to spark fresh gains in chipmakers that have driven most of this year’s stock market rally. Chip and AI infrastructure stocks were broadly lower in pre-market trading. U.S.-listed shares of TSMC fell nearly -4%.

Meanwhile, the price of WTI crude was little changed on Thursday, steadying after three days of gains. The U.S. carried out a fifth consecutive day of strikes on Iran and targeted a sanctioned oil tanker near the country’s main export terminal. The Wall Street Journal reported that U.S. President Trump is weighing an expansion of U.S. military operations in Iran, with options including intensified airstrikes and the deployment of ground forces to seize Iranian islands near the Strait of Hormuz.

Market participants are now awaiting a fresh batch of U.S. economic data, with particular attention on retail sales figures, remarks from Federal Reserve officials, and a new wave of corporate earnings reports.

In yesterday’s trading session, Wall Street’s three main equity benchmarks closed mixed. Most members of the Magnificent Seven stocks advanced, with Apple (AAPL) gaining over +4% and Alphabet (GOOGL) rising more than +3%. Also, PayPal Holdings (PYPL) jumped more than +17% and was the top percentage gainer on the S&P 500 and Nasdaq 100 following reports that payments startup Stripe and private equity firm Advent International jointly offered to buy the company for more than $53 billion. In addition, BlackRock (BLK) climbed over +6% after the company reported strong Q2 results and assets under management exceeding $15 trillion for the first time. On the bearish side, chip and AI infrastructure stocks sank, with Western Digital (WDC) slumping over -8% to lead losers in the Nasdaq 100 and Micron Technology (MU) sliding about -8%.

Economic data released on Wednesday showed that the U.S. producer price index for final demand fell -0.3% m/m and rose +5.5% y/y in June, weaker than expectations of no change m/m and +6.2% y/y. Also, the core PPI, which excludes volatile food and energy costs, rose +0.2% m/m and +4.7% y/y in June, weaker than expectations of +0.3% m/m and +5.2% y/y. In addition, the U.S. July Empire State manufacturing index rose to 15.6, stronger than expectations of 9.3.

“There’s no near-term pressure on the Fed, but oil is in the driver’s seat over the longer term. Energy saved the day in June, but that might become ancient history if the Strait of Hormuz doesn’t open soon,” said David Russell at TradeStation.

In Senate testimony on Wednesday, Fed Chairman Kevin Warsh reaffirmed his commitment to deliver price stability but also rejected the view that the AI boom would spur persistent inflation. “I don’t view a one-time change in prices as necessarily being inflationary because I think there’s a supply response. In that way, this is different from a foreign conflict and what it might do, which tends to reduce the supply side of the economy,” he said. 

New York Fed President John Williams said on Wednesday that “the current stance of monetary policy is well positioned” to bring inflation back to the central bank’s 2% target. “Inflation is unquestionably too high. But there are encouraging reasons to expect that inflation has peaked and should edge down in coming quarters,” Williams added. At the same time, Fed Governor Lisa Cook said the risk of persistent inflation now exceeds that of a weakening labor market, as the AI build-out and recent supply shocks fuel price pressures. “If we do not see signs of disinflation soon, I am prepared to act,” Cook said.

Meanwhile, the Fed said on Wednesday in its Beige Book survey of regional business contacts that U.S. economic activity expanded at a slight to moderate pace in recent weeks as most regions reported little to no change in employment levels. The report noted that prices rose at a moderate pace overall. “Some contacts tied these cost increases to the conflict in the Middle East; others mentioned tariffs. Consumer prices continued to rise, and a few districts said contacts saw greater price sensitivity among their customers,” according to the Beige Book.

U.S. rate futures have priced in an 89.8% chance of no rate change and a 10.2% chance of a 25 basis point rate hike at the conclusion of the Fed’s July meeting.

In tariff news, U.S. Trade Representative Jamieson Greer said late on Wednesday that the U.S. intends to impose a 25% tariff on certain imports from Brazil under Section 301 of the Trade Act.

Second-quarter corporate earnings season is gathering pace, and investors look ahead to new reports today from high-profile companies such as UnitedHealth Group (UNH), GE Aerospace (GE), Netflix (NFLX), Abbott Laboratories (ABT), and Intuitive Surgical (ISRG). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +24% jump in quarterly earnings for Q2 compared to the previous year.

On the economic data front, investors will focus on U.S. Retail Sales data, set to be released in a couple of hours. Economists, on average, forecast that Retail Sales will show a +0.2% m/m increase in June. That compares with a +0.9% m/m jump a month earlier.

U.S. Core Retail Sales, which exclude motor vehicles and parts, will also be closely watched today. Economists project the June reading to be unchanged m/m after a +0.8% m/m climb in May.

The U.S. Philadelphia Fed Manufacturing Index will be released today. Economists anticipate that the Philly Fed manufacturing index will stand at 12.7 in July, compared to last month’s value of 10.3.

The National Association of Realtors’ Pending Home Sales data will come in today. Economists expect the June figure to drop -0.5% m/m, following a +3.8% m/m climb in May.

U.S. Initial Jobless Claims data will be released today as well. Economists project this figure to be 216K, compared to last week’s number of 215K.

In addition, market participants will hear perspectives from Fed Vice Chair Philip Jefferson, Dallas Fed President Lorie Logan, and Kansas City Fed President Jeff Schmid throughout the day.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.58%, up +0.53%.

The Euro Stoxx 50 Index is down -0.24% this morning as investors digest corporate earnings reports while keeping a close eye on developments in the Middle East. Utilities and consumer stocks underperformed on Thursday. Also, chip stocks were broadly lower, tracking losses in their Asian peers. At the same time, bank stocks edged higher. Data from the Office for National Statistics released on Thursday showed that the U.K. economy returned to growth in May on strong services-sector activity, but now faces fresh uncertainty and the prospect of higher energy costs amid renewed hostilities between the U.S. and Iran around the Strait of Hormuz. Separately, final data confirmed that the Italian annual inflation rate eased to 3.0% in June. In addition, data showed that the Eurozone slipped into a trade deficit in May as energy prices continued to climb amid supply disruptions caused by the Middle East conflict. Meanwhile, Eurozone government bond yields rose on Thursday, following moves in U.S. Treasury yields, with the gap between German and U.S. 10-year borrowing costs hovering near its narrowest level in a month. In corporate news, Indutrade surged over +13% after the Swedish industrial technology group posted stronger-than-expected Q2 earnings. At the same time, Telenor plunged more than -13% after the Norwegian telecom operator cut its full-year guidance.

U.K. GDP, Italy’s CPI, and Eurozone’s Trade Balance data were released today.

U.K. May GDP rose +0.1% m/m and +1.3% y/y, compared to expectations of no change m/m and +1.4% y/y.

The Italian June CPI was unchanged m/m and rose +3.0% y/y, in line with expectations.

Eurozone’s May Trade Balance came in at -7.8 billion euros, weaker than expectations of 2.8 billion euros.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.85%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -2.79%. 

China’s Shanghai Composite Index closed lower today, weighed down by a broad selloff in the technology sector. Semiconductor stocks sank on Thursday, tracking losses among their regional peers as investors grew more skeptical that the AI-driven rally could withstand lofty valuations. At the same time, Hong Kong-listed internet stocks climbed, staging a comeback on improving earnings expectations, signs of policy support, and optimism surrounding the country’s AI progress. The rebound gathered pace this week after China’s cyberspace regulator approved Apple Intelligence for the iPhone. The China version will be powered by Alibaba Group’s Qwen model, while Baidu has also been confirmed as a partner. Meanwhile, Chinese leader Xi Jinping is expected to present an ambitious vision for China’s role in global AI governance at a forum on Friday, as Huawei unveils its most advanced AI computing cluster yet in a sign of Beijing’s effort to develop a domestic alternative to U.S. technology. Attention now shifts to a late-July meeting of the Politburo, where top leaders typically review the economy and fine-tune policy to support growth. Investors are hoping for additional stimulus after the State Council approved a five-year plan designed to boost consumption.

Japan’s Nikkei 225 Stock Index closed sharply lower today, snapping a two-day winning streak as concerns over the durability of the AI rally dampened sentiment. Chip and other AI-related stocks tumbled on Thursday. Memory chipmaker Kioxia Holdings plunged over -15%, tech investor SoftBank Group sank more than -6%, and chip-testing equipment maker Advantest dropped over -5%, weighing heavily on the benchmark index. The Nikkei and the Nasdaq Composite have “ridden the wave of AI enthusiasm, but now that trade seems buffeted by uncertainty and at risk of more declines,” said Chris Beauchamp at IG. Meanwhile, Japanese government bond yields climbed on Thursday amid inflation concerns and persistent worries about the nation’s fiscal health. A Bank of Japan survey released on Thursday showed that more than 90% of Japanese households expect prices to rise over the next year, up from three months earlier in a sign of broadening inflationary pressure. The shift in consumer perceptions supports the central bank’s push for further interest-rate hikes, as rising inflation expectations are likely to lift the nation’s underlying inflation. BOJ Executive Director Koji Nakamura said on Thursday that postponing necessary interest-rate hikes could heighten inflation risks and hurt the economy over the longer term. In other news, foreign investors bought a net 745.6 billion yen worth of Japanese stocks in the week through July 11th, ending a two-week selling streak, according to Ministry of Finance data. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.84% to 32.27.

Pre-Market U.S. Stock Movers

Chip and AI infrastructure stocks were broadly lower in pre-market trading, with Advanced Micro Devices (AMD) falling over -3% and Micron Technology (MU) dropping more than -2%.

Most members of the Magnificent Seven stocks edged higher in pre-market trading, with Alphabet (GOOGL) and Microsoft (MSFT) rising over +1%.

AST SpaceMobile (ASTS) slumped more than -9% in pre-market trading after the satellite broadband company priced a $1 billion private offering of 1.625% convertible senior notes due 2034.

United Airlines (UAL) fell over -3% in pre-market trading after the carrier provided soft Q3 adjusted EPS guidance.

UnitedHealth Group (UNH) climbed over +5% in pre-market trading after the insurer posted better-than-expected Q2 results and raised its full-year adjusted EPS guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - July 16th

UnitedHealth Group (UNH), GE Aerospace (GE), Netflix (NFLX), Abbott Laboratories (ABT), Intuitive Surgical (ISRG), Prologis (PLD), U.S. Bancorp (USB), State Street (STT), Citizens Financial Group (CFG), Alcoa (AA), Commerce Bancshares (CBSH), F.N.B. (FNB), First Financial Bankshares (FFIN), Independent Bank (INDB), Cohen & Steers (CNS), Simmons First National (SFNC), ManpowerGroup (MAN), Westamerica Bancorporation (WABC), Park Aerospace (PKE), Insteel Industries (IIIN), Bank7 (BSVN).