Chipmaker Sell-Off Weighs on Stock Indices

The S&P 500 Index ($SPX) (SPY) is down by -0.61% today, the Dow Jones Industrial Average ($DOWI) (DIA) is down by -0.10%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -1.76%.  E-mini S&P futures (ESU26) are down -0.68%, and September E-mini Nasdaq futures (NQU26) are down -1.88%.

Stock indices are retreating today, with the S&P 500 and the Dow Jones Industrials falling to 2-week lows.   Soaring global bond yields are weighing on technology stocks today, dragging equity markets lower worldwide.  Rising crude oil prices are fueling inflation concerns as hostilities in the Middle East show no signs of easing.  WTI crude oil climbed to a 3-week high today, which pushed the 10-year Japan JGB bond yield up to a 30-year high of 2.967%, the 10-year German Bund yield up to a 15-year high of 3.272%, and the 10-year T-note yield up to a 1.5-year high of 4.75%.  However, stocks recovered from their worst level after bond yields fell from their highs and turned lower.  The 10-year T-note yield is now down -1 bp to 4.71%.  

Today’s US housing news was mixed for stocks.  July housing starts fell -12.4% m/m to 1.239 million, weaker than expectations of 1.345 million.  However, July building permits, a proxy for future construction, rose +5.0% m/m to a 5-month high of 1.443 million, stronger than expectations of 1.375 million.

Other US economic news today was mixed for stocks.  The July import price index ex-petroleum rose +0.3% m/m, stronger than expectations of +0.1% m/m.  Also, July manufacturing production rose +0.2% m/m, right on expectations.  In addition, July pending home sales fell -2.3% m/m, weaker than expectations of no change.

Sep WTI crude oil prices (CLU26) pushed up to a 3-week high today after a vessel heading out of the Strait of Hormuz was struck by an unknown projectile.  Also, President Trump said he's not interested in extending the expired agreement with Iran, dimming prospects for a swift reopening of the Strait of Hormuz.  Mr. Trump also said that the US naval blockade on Iranian ports is putting pressure on the country, and he has no timeline for resolving the US-Iran conflict.

On Monday, US Energy Secretary Chris Wright said that the US is playing the long game with Iran, implying the US has no plans to de-escalate the conflict, potentially limiting crude supplied from the Middle East.

Treasury Secretary Bessent said last week that the administration will soon announce unprecedented economic measures against Iran that “have never been seen in the history of economic isolation of a country.”  The economic measures would add to the current US naval blockade of Iranian ports. 

There have been no signs of progress toward a US-Iran agreement to fully open the Strait of Hormuz.  An Iranian military spokesperson said last Thursday that no ship can safely pass the Strait of Hormuz without Iran’s authorization and supervision and that President Trump’s claims of control over the Strait are “nothing more than lies.”  The Iranian statement was in response to President Trump's comment last Tuesday that the US has “total control over the Hormuz Strait” and that “we own it.” 

The outlook for strong Q2 earnings is a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost 32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence.  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.  So far, earnings results have been positive, with 85% of the 456 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. 

The markets are discounting a 35% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.

Overseas stock markets are mixed today.  The Euro Stoxx 50 fell to a 2-week low and is down -0.66%. China's Shanghai Composite climbed to a 5-week high and closed up +0.19%.  Japan's Nikkei-225 Stock Average closed down sharply by -2.54%.

Interest Rates

September 10-year T-notes (ZNU6) are up +3 ticks today.  The 10-year T-note yield is down -1.6 bp to 4.706%.  Sep T-notes recovered from a 1-week low today, and the 10-year T-note yield fell from a 1.5-year high of 4.746%.  Short covering emerged in T-notes today after stocks retreated, which boosted safe-haven demand for T-notes.  Also, the unexpected decline in US July pending home sales was supportive for T-notes. 

T-notes initially moved lower today after WTI crude oil prices rise to a 3-week high, pushing inflation expectations higher.   The 10-year breakeven inflation rate rose to a 3.5-week high of 2.299% today.  Also, the larger-than-expected increase in the July import price index ex-petroleum was negative for T-notes.

European government bond yields are moving higher today.  The 10-year German bund yield rose to a 15-year high of 3.272% and is up +3.5 bp to 3.256%.  The 10-year UK gilt yield climbed to a 3.5-week high of 5.101% and is up +1.0 bp to 5.070%.

The German Aug ZEW expectations of economic growth survey rose +7.9 to a 6-month high of 34.2, stronger than expectations of 30.0.

ECB Chief Economist Philip Lane said the pace of consumer price increases in the Eurozone is likely to hold "well above" the ECB's 2% target this year due to the Iran war. 

Markets are discounting a 95% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.

US Stock Movers

Chipmakers and AI-infrastructure stocks are under pressure today from rising bond yields.  The iShares Semiconductor ETF (SOXX) is down more than -5%.  Marvell Technology (MRVL), Sandisk (SNDK), and Seagate Technology Holdings Plc (STX) are down more than -8%, and ARM Holdings Plc (ARM), Intel (INTC), Western Digital (WDC), Lam Research (LRCX),  and Micron Technology (MU) are down more than -7%.  Also, Applied Materials (AMAT) and KLA Corp (KLAC) are down more than -6%, and Advanced Micro Devices (AMD), Microchip Technology (MCHP), and ASML Holding NV (ASML) are down more than -5%.  In addition, Analog Devices (ADI) and Texas Instruments (TXN) are down more than -4%.

Software stocks are climbing today, a supportive factor for the overall market.  Intuit (INTU) is up more than +4% to lead gainers in the Nasdaq 100, and Adobe Systems (ADBE), Autodesk (ADSK), Atlassian Corp (TEAM), and Salesforce (CRM) are up more than +3%.   Also, Thomson Reuters (TRI) and ServiceNow (NOW) are up more than +2%, and International Business Machines (IBM) is up more than +1%.

Klarna Group Plc (KLAR) is down more than -19% after cutting its full-year revenue forecast to $4.08 billion to $4.16 billion, well below a previous forecast of $4.34 billion.

Fabrinet (FN) is down more than -19% despite reporting better-than-expected Q4 EPS as Datacom sales disappointed. 

Andersen Group (ANDG) is down more than -7% after holders offered 4.28 million shares of the company’s common stock.

Meta Platforms (META) is down more than -3% as the company is facing a jury trial in federal court over claims it deliberately designed Facebook and Instagram to encourage compulsive use among young users.

Amylyx Pharmaceuticals (AMLX) is up more than +48% after saying that its GLP-1 receptor met its primary endpoint in a late-stage trial as a treatment for patients who experience low blood sugar levels following bariatric surgery.

Targa Resources (TRGP) is up more than +7% to lead gainers in the S&P 500 after announcing that it signed a 20-year, fee-based integrated midstream agreement with ExxonMobil.

Duolingo (DUOL) is up more than +6% after D.A. Davidson upgraded the stock to buy from neutral with a price target of $160.

Bath & Body Works (BBWI) is up more than +6% after Citigroup upgraded the stock to buy from neutral with a price target of $25.

Tapestry (TPR) is up more than +3% after Daiwa Securities upgraded the stock tp outperform from neutral with a price target of $140.

Earnings Reports (8/18/2026)

Amer Sports Inc (AS), Home Depot Inc/The (HD), Jack Henry & Associates Inc (JKHY), Keysight Technologies Inc (KEYS), Toll Brothers Inc (TOL).