Broader Market Boosted by Chipmaker Strength

The S&P 500 Index ($SPX) (SPY) today is up +0.17%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.34%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.51%.  September E-mini S&P futures (ESU26) are up +0.20%, and September E-mini Nasdaq futures (NQU26) are up +0.59%. 

Stock indexes are mostly higher today amid a rebound in chipmakers. Short covering emerged in chipmakers and AI-infrastructure stocks ahead of earnings results of megacap technology stocks this week, beginning with Alphabet on Wednesday.   Stocks also found support after crude oil prices fell from their highs on signs that diplomatic efforts to end the US-Iran war were ongoing.  The weakness in software stocks today is limiting the overall market's upside.

Geopolitical risks continue, as the US conducted a ninth straight day of airstrikes on Iran in an attempt to reopen the Strait of Hormuz, bombing military targets and communications networks.  Iran retaliated by launching drones and missiles at US bases in Kuwait, Jordan, Bahrain, and Iraq and attacking tankers transiting the Strait of Hormuz.  The New York Times reported today that the US is sending more warplanes to the Middle East, including F-35 and F-16 fighter jets, a possible sign that US military operations could expand in the coming days.

Also, signs that the conflict in the Middle East is widening are supporting crude oil after Houthi rebels said they will impose a maritime blockade on Saudi Arabia in retaliation for what they say is the kingdom's siege on the Yemeni capital, a potential threat to Saudi Arabian crude exports through the Red Sea.

However, WTI crude oil (CLQ26) prices fell from their highs after Iran said it wouldn't abandon diplomacy and that Qatar and Pakistan had reached out to mediate an end to the conflict, proposing a 10-day ceasefire between the US and Iran.  Crude prices initially climbed to a 5-week high today as the resumption of hostilities between the US and Iran has reduced traffic through the Strait of Hormuz to a near standstill, tightening global oil supplies. 

The outlook for strong Q2 earnings, which begin in earnest 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 14% 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 -0.03%.  China's Shanghai Composite recovered from a 10.5-month low and closed up +0.85%.  Japan's Nikkei-225 Stock Average did not trade, with Japanese markets closed for the Marine Day holiday.

Interest Rates

September 10-year T-notes (ZNU6) today are down -9 ticks, and the 10-year T-note yield is up +2.8 bp to 4.576%.  Sep T-notes are under pressure today amid a stock rebound, which has reduced safe-haven demand for T-notes.  Also, today’s rally in WTI crude oil to a 5-week high has boosted inflation expectations and is negative for T-notes. 

European government bond yields are moving higher today.  The 10-year German bund yield is up +1.2 bp to 3.138%.  The 10-year UK gilt yield is up +4.7 bp to 4.997%.

German Jun PPI fell -0.3% m/m and rose +1.8% y/y, right on expectations.

Swaps are discounting a 3% chance of a +25 bp ECB rate hike at its next policy meeting on Thursday.

US Stock Movers

Chipmakers and AI-infrastructure stocks are moving higher today, providing support to the overall market.  The iShares Semiconductor ETF (SOXX) is up more than +1%.  Sandisk (SNDK) and Western Digital (WDC) are up more than +5%, and Marvell Technology (MRVL) is up more than +4%.  Also, Intel (INTC) and Advanced Micro Devices (AMD) are up more than +3%, and Seagate Technology Holdings Plc (STX), Micron Technology (MU), and Broadcom (AVGO) are up more than +2%. 

Software stocks are sliding today, limiting gains in the broader market.  Oracle (ORCL) is down more than -3%, and Adobe Systems (ADBE) is down more than -2%.  Also, ServiceNow (NOW), Intuit (INTU), Autodesk (ADSK), International Business Machines (IBM), and Thomson Reuters (TRI) are down more than -1%.

Iren Ltd (IREN) is up more than +14% after raising its year-end AI-cloud revenue estimate to more than $4 billion from a previous estimate of $3.7 billion.

Lumentum Holdings (LITE) is up more than +7% to lead gainers in the S&P 500 and Nasdaq 100 after Barclays upgraded the stock to overweight from equal weight with a price target of $1,000.

Teradyne (TER) is up more than +5% after UBS raised its price target on the stock to $500 from $440. 

LXP Industrial Trust (LXP) is up +4% after Brookfield Asset Management and CPP Investments agreed to purchase the company for $5.2 billion, or about $61.20 per share. 

Global Payments (GPN) is up more than +3% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $100. 

Alphabet (GOOGL) is up more than +2% to lead gainers in the Dow Jones Industrials after The Information reported that the company is developing a new server chip designed to optimize its Gemini artificial intelligence model.

Nebius Group NV (NBIS) is up more than +2% after Freedom Capital Markets upgraded the stock to buy from hold with a price target of $200.

Domino’s Pizza (DPZ) is up more than +2% after reporting Q2 revenue of $1.19 billion, above the consensus of $1.18 billion.   

Urban Outfitters (URBN) is up more than +2% after Goldman Sachs upgraded the stock to buy from neutral with a price target of $93. 

Penguin Solutions (PENG) is down more than -11% after Barclays downgraded the stock to underweight from equal weight with a price target of $40. 

Truist Financial (TFC) is down more than -2% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $53.

Earnings Reports(7/20/2026)

AGNC Investment Corp (AGNC), BOK Financial Corp (BOKF), Crown Holdings Inc (CCK), Domino's Pizza Inc (DPZ), Steel Dynamics Inc (STLD), W R Berkley Corp (WRB), Wintrust Financial Corp (WTFC), Zions Bancorp NA (ZION).