Rout in Chipmakers Weighs on Broader Market

The S&P 500 Index ($SPX) (SPY) is down by -0.27% today, the Dow Jones Industrial Average ($DOWI) (DIA) is up by +0.26%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -1.00%.  E-mini S&P futures (ESU26) are down -0.26%, and September E-mini Nasdaq futures (NQU26) are down -1.05%.

Stock indices are mixed today, with the Nasdaq 100 falling to a 3-week low.  The broader market is under pressure today amid the weakness in chipmakers and AI-infrastructure stocks.  Also, weighing on market sentiment was the collapse of trade talks late last Friday between Canada and the US, prompting the US to apply a 50% tariff on about $20 billion of Canadian goods.  Canada announced retaliation on US goods that will take effect on September 8.

Stock losses are limited as crude oil prices are down more than -2%, pushing inflation expectations and bond yields lower.  The 10-year T-note yield is down -3 bp to 4.70%. 

Today’s US economic news showed the July Chicago Fed national activity index fell -0.14 to -0.08, slightly stronger than expectations of -0.09.

Markets await a press conference later today from US Treasury Secretary Bessent, who will detail plans to isolate Iran’s economy.  Mr. Bessent told the Financial Times that "The world should realize that our objective is to sever every economic lifeline that sustains the tyrannical regime until Iran stands alone." Iran's secretary of the Supreme National Security Council responded by saying, "Iran will regard any country's participation in or support for America's economic war against the Iranian people as an act of war and not a single drop of oil will be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf."

Oct WTI crude oil prices (CLV26) are down more than -2% today after Axios reported that about 40 tankers transited out of the Strait of Hormuz last Friday night, transporting around 16 million bbl of crude.  Also, the Joint Maritime Information Center cut the threat level for shipping in the Gulf of Oman to “moderate,” one step lower than the previous assessment.  The moderate assessment means the threat of attack on shipping off the coast of Oman is possible but not likely. 

President Trump has 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.  Also, 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.

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 86% of the 468 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. 

The markets are discounting a 40% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.

Overseas stock markets are lower today.  The Euro Stoxx 50 is down -0.36%.  China's Shanghai Composite fell to a2.5-week low and closed down -0.59%.  Japan's Nikkei-225 Stock Average closed down -0.74%.

Interest Rates

September 10-year T-notes (ZNU6) are up by +7 ticks today.  The 10-year T-note yield is down -3.6 bp to 4.698%.  T-notes are climbing today amid weakness in crude oil prices, which weakens inflation expectations.  T-notes also have safe-haven support from today’s stock market weakness.  T-notes added to their gains today on a report from CNBC that said the Treasury could use the Treasury General Account, which had a balance of $935 billion on August 20, to fund expanded buybacks of higher-yielding, older government securities.   

Supply pressures are limiting the upside in T-note prices as the Treasury will auction $211 billion of T-notes and floating rate notes this week, beginning with Tuesday’s $69 billion auction of 2-year T-notes.  

European government bond yields are moving lower today.  The 10-year German bund yield is down -0.3 bp to 3.255%.  The 10-year UK gilt yield is down -0.1 bp to 5.059%.

ECB Executive Board member Piero Cipollone said, "In the event of a supply-side shock, such as the oil shock, hiking interest rates so as to stabilize inflation around the target could dampen economic growth that is already affected by a negative shock."

Markets are discounting a 96% 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, weighing on the broader market.  Sandisk (SNDK) is down more than -8% to lead losers in the S&P 500 and Nasdaq 100, and Western Digital (WDC), Micron Technology (MU), and Seagate Technology Holdings Plc (STX) are down more than -6%.   Also, Marvell Technology (MRVL) and Intel (INTC) are down more than -4%, and Lam Research (LRCX), Advanced Micro Devices (AMD), and Microchip Technology (MCHP) are down more than -3%.  In addition, Applied Materials (AMAT), Nvidia (NVDA), ARM Holdings Plc (ARM), KLA Corp (KLAC), NXP Semiconductors NV (NXPI), and Texas Instruments (TXN) are down more than -2%. 

Energy producers and service providers are sliding today with WTI crude oil down more than -2%.  APA Corp (APA), Diamondback Energy (FANG), Halliburton (HAL), Occidental Petroleum (OXY), and SLB Ltd (SLB) are down more than -2%.  Also, Baker Hughes (BKR), Chevron (CVX), Devon Energy (DVN), and ExxonMobil Holdings (XOM) are down more than -1%.

US Steel producers are climbing today on the tariffs imposed on Canadian steel makers.  Cleveland-Cliffs (CLF) is up more than +6%, Nucor (NUE) is up more than +3%, and Steel Dynamics (STLD) is up more than +2%.

Homebuilders and suppliers are moving higher today with the decline in T-note yields, a supportive factor for housing demand.  Lennar (LEN) is up more than +2%, and DR Horton (DHI), Pulte Group (PHM), KB Home (KBH), and Builders Firstsource (BLDR) are up more than +1%. 

Regenxbio (RGNX) is down more than -22% after the FDA placed a clinical hold on its investigational gene therapy RGX-121 for Hunter Syndrome, citing the discovery of either small nodules or a cystic mass in spine MRIs of five trial participants. 

Applied Optoelectronics (AAOI) is down more than -12% after announcing that it filed for a possible offering of $600 million in shares of common stock.   

Mastercard (MA) is up more than +3%, and Visa (V) is up more than +2% to lead gainers in the Dow Jones Industrials after CNBC reported that President Trump in June reshuffled his portfolio in June and bought shares of the companies. 

Darden Restaurants (DRI) is up more than +2% after Baird upgraded the stock to outperform from neutral with a price target of $250. 

Earnings Reports (8/24/2026)

Napco Security Technologies (NSSC).