Stocks Pressured by Chip Stock Weakness

The S&P 500 Index ($SPX) (SPY) today is down -0.14%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.26%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.36%.  September E-mini S&P futures (ESU25) are down -0.17%, and September E-mini Nasdaq futures (NQU25) are down -0.37%.

Stock indexes today are moving lower on some disappointing quarterly earnings results. NXP Semiconductors is down more than -2% to lead chip makers lower and weigh on the overall market after issuing a Q3 revenue forecast that missed some bullish analysts’ estimates.  Also, Lockheed Martin is down more than -7% after reporting weaker-than-expected Q2 net sales and cutting its full-year EPS estimate.  In addition, Sherwin-Williams is down more than -2% after reporting Q2 adjusted EPS below the consensus, and cutting its full-year adjusted EPS estimate.

On the positive side, D.R. Horton is up more than +10% to lead homebuilders higher after reporting stronger-than-expected Q3 net sales and raising its full-year revenue forecast.  Also, Northrop Grumman is up more than +9% after boosting its full-year adjusted EPS forecast.  In addition, bond yields fell from overnight highs and were slightly lower after Treasury Secretary Bessent said, “He sees no reason for Fed Chair Powell to step down right now.”  The 10-year T-note yield is down -1 bp to 4.36%

Recent trade news has put some downward pressure on stocks.  Last Wednesday, President Trump announced that he intends to send a tariff letter to more than 150 countries, notifying them that their tariff rates could be 10% or 15%, effective August 1.  Also, President Trump recently announced that the US will impose 30% tariffs on US imports from the European Union and Mexico, effective August 1.  In addition, Mr. Trump said that a 35% tariff on some Canadian products would take effect on August 1, up from the current 25%. 

The markets this week will focus on any tariff news along with the announcement of any new trade deals.  On Wednesday, June existing home sales are expected to fall -0.7% m/m to 4.00 million. On Thursday, weekly initial unemployment claims are expected to climb by +6,000 to 227,000.  Also, the July S&P US manufacturing PMI is expected to slip -0.4 to 52.5.  Finally, on Thursday, June new home sales are expected to climb +4.3% m/m to 650,000. On Friday, June capital goods new orders nondefense ex-aircraft and parts are expected to increase by +0.2% m/m.

Federal funds futures prices are discounting the chances for a -25 bp rate cut at 3% at the July 29-30 FOMC meeting and 58% at the following meeting on September 16-17.

The markets are awaiting a heavy slate of quarterly corporate earnings results this week, including Alphabet and Tesla on Wednesday.  About one-fifth of the companies in the S&P 500 are expected to report their Q2 earnings results this week.  Early results now show S&P 500 earnings are on track to rise +3.2% for the second quarter, better than the pre-season expectations of +2.8% y/y, according to Bloomberg Intelligence.  Also, only six of the eleven S&P 500 sectors are projected to post an increase in earnings, the fewest since Q1 of 2023, according to Yardeni Research. 

Overseas stock markets today are mixed.  The Euro Stoxx 50 fell to a 2-week low and is down -0.64%.  China’s Shanghai Composite climbed to a 9.5-month high and closed up +0.62%.  Japan’s Nikkei Stock 225 fell from a 3-week high and closed down -0.11%.

Interest Rates

September 10-year T-notes (ZNU25) today are up +2 ticks.  The 10-year T-note yield is down -1.4 bp to 4.364%.  T-notes recovered from overnight losses and moved higher as short covering emerged on comments from Treasury Secretary Bessent, who said “he sees no reason for Fed Chair Powell to step down right now.”  T-notes were under pressure due to concerns that President Trump would try to fire Powell, which could send bond yields sharply higher as investors question the Fed’s independence.  T-notes also garnered carryover support today from a rally in 10-year German bunds to a 2-week high.

European government bond yields today are moving lower.  The 10-year German bund yield fell to a 2-week low of 2.600% and is down -1.0 bp to 2.603%.  The 10-year UK gilt yield is down -0.6 bp to 4.597%.

The ECB’s quarterly Bank Lending Survey stated that “Loan demand was supported by declining interest rates, but dampened by global uncertainty and trade tensions, and while lenders saw a 'slight net increase' in loan demand in Q2, the uptake remained weak overall.”

Swaps are discounting the chances at 1% for a -25 bp rate cut by the ECB at Thursday’s policy meeting.

US Stock Movers

Weakness in chip stocks is a negative factor for stocks today, with NXP Semiconductors NV (NXPI) down more than -2% after forecasting Q3 revenue of $3.05 billion to $3.25 billion, below the whisper number of $3.30 billion.  Also, ARM Holdings Plc (ARM) and Advanced Micro Devices (AMD) are down more than -4%, and Nvidia (NVDA), Broadcom (AVGO), Lam Research (LRCX), and Micron Technology (MU) are down more than +3%.  In addition, Marvell Technology (MRVL), Applied Materials (AMAT), and KLA Corp (KLAC) are down more than -2%. 

Phillip Morris International (PM) is down more than -7% to lead losers in the S&P 500 after forecasting full-year organic revenue to climb +6% to +8%, weaker than the consensus of +8.29%. 

Lockheed Martin (LMT) is down more than -7% after reporting Q2 net sales of $18.16 billion, weaker than the consensus of $18.53 billion, and cut its full-year EPS estimate to $21.70-$22.00 from a previous estimate of $27.00-$27.30. 

Equifax (EFX) is down more than -7% after forecasting Q3 adjusted EPS of $1.87-$1.97, below the consensus of $1.99. 

General Motors (GM) is down more than -6% after forecasting full-year adjusted EBIT of $10.00 billion to $11.37 billion, with the midpoint below the consensus of $11.37 billion. 

RTX Corp (RTX) is down more than -3% after cutting its full-year adjusted EPS forecast to $5.80-$5.95 from a previous forecast of $6.00-$6.15, weaker than the consensus of $5.98. 

Sherwin-Williams (SHW) is down more than -2% after reporting Q2 adjusted EPS of $3.38, weaker than the consensus of $3.81, and cutting its full-year adjusted EPS estimate to $11.20-$11.50 from a previous estimate of $11.65-$12.05, below the consensus of $11.87. 

D.R. Horton (DHI) is up more than +10% to lead homebuilders higher after reporting Q3 net sales of 23,071, better than the consensus of 22,017, and raising its full-year revenue forecast to $33.7 billion-$34.2 billion from a previous estimate of $33.3 billion-$34.8 billion, the midpoint above the consensus of $33.84 billion. Also, PulteGroup (PHM) is up more than +7%, Lennar (LEN) is up more than +6%, and Toll Brothers (TOL) is up more than +4%.

IQVIA Holdings (IQV) is up more than +14% to lead gainers in the S&P 500 after reporting Q2 revenue of $4.02 billion, above the consensus of $3.96 billion. 

Northrop Grumman (NOC) is up more than +9% after boosting its full-year adjusted EPS forecast to $25.00-$25.40 from a previous forecast of $24.95-$25.35, the midpoint above the consensus of $25.17.   

PACCAR Inc. (PCAR) is up more than +4% to lead gainers in the Nasdaq 100 after raising the lower end of its full-year capex estimate to $750 million-$800 million from a previous forecast of $700 million-$800 million. 

CSX Corp (CSX) is up more than +2% after Semafor reported that BNSF is working with Goldman Sachs to explore a takeover of a rival. 

Calix (CALX) is up more than +1% after reporting Q2 adjusted EPS of 33 cents, better than the consensus of 21 cents, and forecasting Q3 adjusted EPS of 31 cents-37 cents, stronger than the consensus of 23 cents.

Earnings Reports (7/22/2025)

Avery Dennison Corp (AVY), Baker Hughes Co (BKR), Capital One Financial Corp (COF), Chubb Ltd (CB), Coca-Cola Co/The (KO), CoStar Group Inc (CSGP), Danaher Corp (DHR), DR Horton Inc (DHI), Enphase Energy Inc (ENPH), EQT Corp (EQT), Equifax Inc (EFX), General Motors Co (GM), Genuine Parts Co (GPC), Halliburton Co (HAL), Interpublic Group of Cos Inc/The (IPG), Intuitive Surgical Inc (ISRG), Invesco Ltd (IVZ), IQVIA Holdings Inc (IQV), KeyCorp (KEY), Lockheed Martin Corp (LMT), MSCI Inc (MSCI), Northrop Grumman Corp (NOC), PACCAR Inc (PCAR), Pentair PLC (PNR), Philip Morris International In (PM), PulteGroup Inc (PHM), Quest Diagnostics Inc (DGX), RTX Corp (RTX), Sherwin-Williams Co/The (SHW), Synchrony Financial (SYF), Texas Instruments Inc (TXN).