Chips, Oil, Weigh Early Despite Solid TSM Results
Published as of: July 16, 2026, 9:25 a.m. ET
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| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® Index | 7,572.40 | +28.81 | +0.38% |
| Dow Jones Industrial Average® | 52,658.64 | +150.37 | +0.29% |
| Nasdaq Composite® | 26,269.23 | +162.22 | +0.62% |
| 10-year Treasury yield | 4.59% | +0.04 | -- |
| U.S. Dollar Index | 100.62 | +0.14 | +0.14% |
| Cboe Volatility Index® | 16.36 | +0.69 | +4.40% |
| WTI Crude Oil | $80.60 | +$1.00 | +1.23% |
| Bitcoin | $63,925 | -1,160 | -1.78% |
(Thursday market open) For the second time in three days, solid earnings and guidance from a dominant chip firm preceded a pullback in the sector, possibly an ominous sign as tech results accelerate. Taiwan Semiconductor Manufacturing (TSM) announced a 77% annual earnings gain only to see shares fall more than 4%, hurting other semiconductors and the Nasdaq early. The broader market also dipped and Treasury note yields rose as the U.S. continued striking Iran and crude stayed near recent highs.
Checking data, June retail sales growth was lighter than expected at 0.2% month over month, below the 0.3% consensus, though some elements of the report impressed. Netflix (NFLX) later today caps a week that's generally exceeded expectations in terms of earnings, but shares of the streaming firm fell after its last four reports. Analysts told CNBC that Netflix hasn't had a breakout hit this year.
Major U.S. indexes spent much of Wednesday narrowly in the green but not challenging recent peaks. Relatively benign inflation data this week along with solid earnings from banks and chip equipment makers provided support, though investors seemed more cautious Wednesday, backing away from chips. Volume remained below average, a trend that suggests conviction is lacking.
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Three things to watch
- Retail sales deeper dive: Excluding automobiles, retail sales looked even lighter, falling 0.2% from May. "Consumers took a bit of a step back from restaurants and bars in June, with retail sales for that cohort falling by 0.15% month over month," said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research (SCFR). It's possible that May's 1% growth in retail sales reflected demand being pulled forward, and lower gas prices might also factor in, considering retail sales don't adjust for inflation. Still, the government already downwardly adjusted first quarter Personal Consumption Expenditures (PCE) growth to just 0.5%, and consumer spending forms about 70% of the U.S. economy. The last Atlanta Fed GDPNow estimate for second quarter gross domestic product (GDP) growth was 1.3%, and that gets updated later today. On a more positive note, control group retail sales, which include components that factor into GDP, rose 0.5% in June, the sixth consecutive monthly increase. The government issues its initial second quarter PCE estimate July 30.
- Breadth check shows broadened rally: The percentage of S&P 500 stocks trading above their 50-day moving averages is a healthy 62%. Improved breadth is often a sign of a less concentrated market. Recent small-cap strength and firmness in the S&P 500 Equal Weight Index (SPXEW) also indicate broadening. Still, chips still have a heavy influence. If mega cap earnings show increased spending plans and chip firms keep raising guidance, it could steer more money there, detrimental to improved breadth and making the market more reliant on chips' health. Below the surface, the market has seen more churn. For a while, many participants rode positive momentum generated by the chips, along with stocks related to the AI build-out including computer hardware, power, and construction firms. Today's early action and the fact that chip stocks aren't moving up this week despite strong results from sector giants suggests the recent rotation into areas like financials, industrials, and energy could persist. With earnings expectations so high in the tech sector, stocks there, including some of the year's biggest winners, could face the greatest headwinds. Strong bank earnings reinforce the idea that corporate fundamentals remain resilient.
- Consumer sentiment seen improving: Beyond retail sales, investors await Friday's 10 a.m. ET preliminary July Consumer Sentiment data from the University of Michigan. Consensus is for a slight rise to 50.7, according to Briefing.com, up from 49.5 in June and still near all-time lows. As always, the report's inflation expectations data may outweigh the sentiment figures. The long- run inflation expectations figure takes precedence with the Fed and fell to 3.3% in June from 3.9% in May. It's less influenced than year-ahead expectations by short-term oil swings, meaning it might pick up whether consumers noticed cooling core inflation last month signaled by the Consumer Price Index (CPI) report. Another report to watch tomorrow brings attention back to the housing sector with mortgage applications heading lower in recent weeks and Congress recently passing major bipartisan legislation aimed at easing home affordability. Housing starts and building permits for June due at 8:30 a.m. ET tomorrow are expected to head separate ways, with starts seen improving from May but permits—one of the leading economic indicators tracked by the U.S. Department of Commerce—seen dropping month over month.
Crypto currents
Bitcoin shows signs of gaining traction: Bitcoin closed above its 50-day moving average for the first time since May 31 on Tuesday. That's encouraging for the bulls, as is the softer-than-expected inflation data released this week and the U.S. dollar's reversal to a one-month low, said Jim Ferraioli, director of digital currencies research and strategy at SCFR. He noted that the active investor cost basis—the average price paid on secondary markets—has slipped to $76,000 from $78,000, meaning traders have been buying the dip. But of course, it's what happens if prices keep rising that will determine whether the bulls are really taking control. A rally to the 200-day moving average in May was met with selling by many who bought during last year's cycle top and were eager to exit at a higher price after a months-long downturn. The 100- and 200-day averages are now key resistance levels, Ferraioli said.
On the move
- TSM became the second massive chip sector stock this week to spark sector-wide selling despite solid results and guidance, following ASML (ASML) on Tuesday. Concerns for TSM appeared to center on its spending plans, as it raised its full-year capital expenditures guidance. As far as revenue guidance, it forecasted an above-consensus third-quarter view.
- The PHLX Semiconductor Index (SOX)—down 15% from recent highs--fell more than 2% Wednesday and a number of chip stocks fell again this morning, including memory names like Western Digital (WDC), down more than 8%, and Sandisk (SNDK) off almost 8%. SK Hynix (SKHY) fell 7%. Memory names came under pressure yesterday after Barron's reported that a Chinese memory chip rival ChangXin Memory Technologies is preparing an initial public offering in China.
- JB Hunt Transport Services (JBHT) floored the gas pedal this morning with 7.5% gains for the trucking firm after earnings per share easily beat analysts' estimates and revenue came in just above expectations. Increased intermodal volumes provided a tailwind.
- United Health (UNH) advanced nearly 6% early after earnings easily topped expectations and the company raised its full-year outlook on more favorable data on medical costs from the first half of the year, the CEO told Bloomberg.
- Humana (HUM) climbed almost 6% on the back of the UNH rally.
- AtaiBeckley (ATAI) jumped 34% as Eli Lilly (LLY) announced plans to buy the biotech company for $2.8 billion.
- Abbott Labs (ABT) soared almost 4% in early trading as earnings per share slightly beat expectations and the company raised its fiscal 2026 EPS guidance.
- United Airlines (UAL) descended almost 3% after reporting late Wednesday. Earnings per share beat estimates and revenue met consensus, but the firm issued negative guidance for the third quarter as fuel costs climb. UAL's CEO told CNBC demand is strong.
- SpaceX (SPCX) fell below its initial public offering price of $135 per share for the first time Wednesday. There's concern about launch competition from Chinese firms, and also a large rise in the amount of shares available to trade on the Nasdaq by early August.
More insights from Schwab
Dollar firmness seen persisting for now: Elevated U.S. bond yields, the hawkish Fed pivot, and the relatively resilient U.S. economy may keep the dollar supported in the near term, wrote Collin Martin, head of fixed income research and strategy at SCFR, in a new column.
Washington update: The Supreme Court's decision preventing President Trump from firing Fed Gov. Lisa Cook, new bipartisan housing legislation, and Trump accounts are among topics addressed by Schwab's latest WashingtonWise podcast. The podcast also discusses how investors can prepare for portfolio risks in a changing market.
Three charts help explain market setup for second half: Find out what they are by checking Schwab's "2 Minutes on the Markets" video hosted by Kasey McCurdy, chief portfolio strategist for Schwab Wealth Advisory.
Summer vacations pondered despite budget cuts: Nearly half of Americans plan to take a vacation this summer that requires a flight, paid lodging, or both, and they expect to spend $3,940 on average on those travel costs. Find out how travelers are looking for ways to make the most of their money in Schwab's look at travel planning.
Chart of the day
Data source: Intercontinental Exchange. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
After hitting a one-year high on June 24, the U.S. Dollar Index ($DXY—candlesticks), which tracks the dollar against a basket of currencies, has fallen 1.1%, including 0.84% over the past two days after the release of softer-than-expected inflation data. The Moving Average Convergence/Divergence (MACD) indicator (lower pane) shows downward momentum accelerating.
The week ahead
Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.
July 17: June housing starts, June building permits, June industrial production, July preliminary University of Michigan consumer sentiment, and expected earnings from Travelers (TRV), Truist Financial (TFC), and Fifth Third Bancorp (FITB).
July 20: No major earnings or data expected.
July 21: Expected earnings from Novartis AG (NVS), Danaher (DHR), Marsh & McLennan (MRSH), 3M (MMM), Northrop Grumman (NOC), General Motors (GM), MSCI (MSCI), D.R. Horton (DHI), Halliburton (HAL), Chubb (CB), and Capital One (COF).
July 22: Expected earnings from GE Vernova (GEV), Philip Morris (PM), AT&T (T), CME Group (CME), Alphabet (GOOGL), Tesla (TSLA), Texas Instruments (TXN), IBM (IBM), ServiceNow (NOW), and CSX (CSX).
July 23: ECB rate decision and expected earnings from RTX (RTX), T-Mobile (TMUS), Thermo Fisher Scientific (TMO), Union Pacific (UNP), Blackstone (BX), Lockheed Martin (LMT), Freeport McMoRan (FCX), Comcast (CMCSA), Honeywell (HON), Intel (INTC), SAP (SAP), and Newmont (NEM).