Stocks Pressured by Global Slide in Chipmakers

The S&P 500 Index ($SPX) (SPY) today is down -0.87%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.12%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.76%.  September E-mini S&P futures (ESU26) are down -0.87%, and September E-mini Nasdaq futures (NQU26) are down -1.79%. 

Stock indexes are moving lower today, with the S&P 500 posting a 1-week low, the Dow Jones Industrials sliding to a 2.5-week low, and the Nasdaq 100 falling to a 5-week low.  The global selloff in chipmakers continues today amid concerns that massive gains fueled by the buildout of artificial intelligence have run too far to justify their elevated valuations.  The rout began in Asia, with China’s Shanghai Composite falling -3% and Japan’s Nikkei Stock Index falling -4% after China's AI startup Moonshot launched its new Kimi K3 AI model, which the company says rivals the strongest offerings from OpenAI and Anthropic PBC, sparking concerns about the industry's spending spree. 

However, stock indexes recovered from their worst levels today after the University of Michigan US Jul consumer sentiment index rose more than expected to a 5-month high and 1-year inflation expectations eased more than expected. Also, strength in cybersecurity stocks is a positive factor for the broader market. 

Today’s US housing news was mixed.  Jun housing starts rose +19.0% m/m to 1.427 million, stronger than expectations of 1.310 million.  However, Jun building permits, a proxy for future construction, fell -3.0% to 1.367 million, below expectations of 1.403 million.

US Jun manufacturing production was unchanged m/m, weaker than expectations of +0.1% m/m.

The US Jun import price index ex-petroleum rose +0.5% m/m, stronger than expectations of +0.4% m/m.

The University of Michigan US Jul consumer sentiment index rose +4.9 to a 5-month high of 54.4, stronger than expectations of 51.0.

The University of Michigan US Jul 1-year inflation expectations eased to 4.2% from 4.6% in Jun, weaker than expectations of 4.4%.  The Jul 5-10-year inflation expectations were unchanged at 3.3% from Jun, right on expectations.

Hawkish comments today from Cleveland Fed President Beth Hammack were negative for stocks and bonds, as she said persistently high inflation is her bigger concern right now, even as consumer spending holds up and unemployment remains low.

Geopolitical risks continue, with WTI crude oil (CLQ26) up more than +3% as the US launched fresh strikes against Iran for the sixth consecutive night, hitting coastal surveillance and air defense sites, military logistics infrastructure, and maritime assets.  Iran responded by attacking US bases in Kuwait, Jordan, and Bahrain, with Kuwait saying a desalination and electricity plant were hit, with many power-generation units sustaining damage.  The Kuwaiti armed forces said it intercepted 32 Iranian drones targeting "vital" institutions.  President Trump pledged to intensify the bombardment until Iran stops attacking ships in the Strait of Hormuz and agrees to open the waterway.

The Wall Street Journal reported that US forces struck multiple bridges to cut supply routes to an Iranian port city and naval base used to support attacks on ships in the Strait of Hormuz.  According to RBC Capital Markets LLC, a seven-day moving average of oil flows through the Strait of Hormuz has slumped to 3.9 million bpd from 8.5 million bpd before the collapse of the ceasefire.

Selling by corporate insiders is another negative for stocks. According to EPFR Global Market Intelligence, executives sold $77.6 billion of stock during the first half of this year, the second-highest amount in more than 20 years.

The outlook for strong Q2 earnings, which began this week, 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. 

The markets are discounting a 10% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.

Overseas stock markets are sharply lower today.  The Euro Stoxx 50 slid to a 1-week low and is down -1.08%.  China's Shanghai Composite sank to a 10.5-month low and closed down -3.05%.  Japan's Nikkei-225 Stock Average fell to a 5-week low and closed down -4.03%.

Interest Rates

September 10-year T-notes (ZNU6) today are up +8 ticks, and the 10-year T-note yield is down -2.6 bp to 4.527%.  Sep T-notes climbed to a 1-week high today, and the 10-year T-note yield fell to a 1-week low of 4.515%.  Today’s slump in global equity markets has sparked safe-haven demand for T-notes.  Gains in T-notes are limited after US Jun housing starts and consumer sentiment rose more than expected, and after WTI crude oil surged by more than +3%, which has lifted inflation expectations.

European government bond yields are moving lower today.  The 10-year German bund yield is down -1.4 bp to 3.120%.  The 10-year UK gilt yield is down -1.6 bp to 4.950%.

Swaps are discounting a 7% 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 selling off for a second day today, dragging the broader market lower.  The iShares Semiconductor ETF (SOXX) fell to a 1.75-month low and is down more than -3%.  KLA Corp (KLAC) is down more than -4%, and Advanced Micro Devices (AMD), Intel (INTC), and Lam Research (LRCX) are down more than -3%.  Also, Microchip Technology (MCHP), NXP Semiconductors NV (NXPI), Texas Instruments (TXN), ASML Holding NV (ASML), Analog Devices (ADI), Marvel Technology (MRVL), Western Digital (WDC), and Qualcomm (QCOM) are down more than -2%.

The Magnificent Seven technology stocks are sliding today, also weighing on the overall market.  Meta Platforms (META) is down more than -5%, and Alphabet (GOOGL) is down more than -2% to lead losers in the Dow Jones Industrials.  Also, Nvidia (NVDA), Tesla (TSLA), and Microsoft (MSFT) are down more than -2%.  In addition, Amazon.com (AMZN) is down -0.43% and Apple (AAPL) is down -0.01%. 

Cryptocurrency-exposed stocks are sliding today along with Bitcoin (^BTCUSD).  MARA Holdings (MARA) is down more than -6%, and Galaxy Digital Holdings (GLXY) is down more than -3%.  Also, Riot Platforms (RIOT)and Coinbase Global (COIN) are down more than -2%, and Strategy (MSTR) and Circle Internet Group (CRCL) are down more than -1%.

Cybersecurity stocks are climbing today, a positive factor for the overall market.  Palo Alto Networks (PANW), Zscaler (ZS), and Cloudflare (NET) are up more than +2%, and CrowdStrike Holdings (CRWD) and Fortinet (FTNT) are up more than +1%.  Also, Okta (OKTA) is up +0.70%.

STAAR Surgical (STAA) is down more than -13% after reporting preliminary Q2 net sales of $90.0 million, below the consensus of $90.2 million. 

Intuitive Surgical (ISRG) is down more than -12% to lead losers in the S&P 500 and Nasdaq 100 after maintaining its full-year forecast despite reporting better-than-expected Q2 earnings results. 

Netflix (NFLX) is down more than -9% after forecasting full-year revenue of $51 billion to $51.4 billion, the midpoint below the consensus of $51.38 billion. 

Autoliv (ALV) is down more than -4% after reporting Q2 adjusted EPS of $2.43, below the consensus of $2.45. 

International Business Machines (IBM) is down more than -3% to lead losers in the Dow Jones Industrials after Citigroup cut its price target on the stock to $255 from $375. 

Travelers Cos (TRV) is up more than +8% to lead gainers in the S&P 500 and Dow Jones Industrials after reporting Q2 net premiums written of $11.53 billion, above the consensus of $11.409 billion.

Construction Partners (ROAD) is up more than +3% after S&P Dow Jones Indices announced that the company will replace Molina Healthcare in the S&P SmallCap 600 before the opening of trading on Wednesday, July 22. 

Jazz Pharmaceuticals Plc (JAZZ) is up more than +2% after Canaccord Genuity initiated coverage of the stock with a buy recommendation and a price target of $290. 

Earnings Reports(7/17/2026)

Fifth Third Bancorp (FITB), Regions Financial Corp (RF), Travelers Cos Inc/The (TRV), Truist Financial Corp (TFC).