The S&P 500 Index ($SPX) (SPY) on Thursday closed down -0.51%, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -0.20%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.62%. September E-mini S&P futures (ESU26) fell -0.50%, and September E-mini Nasdaq futures (NQU26) fell -1.58%.
Stock indexes settled lower on Thursday, with the Nasdaq 100 falling to a 1-week low. The weakness in chipmakers and AI-infrastructure stocks weighed on the overall market on Thursday amid concerns over whether massive artificial intelligence investments will justify current lofty valuations. Chipmakers had negative carryover pressure on Thursday from a -6% plunge in South Korea’s Kospi Index, which was weighed down by sharp losses in SK Hynix and Samsung Electronics.
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Also weighing on the broader market on Thursday was weakness in cloud infrastructure stocks and a selloff in mining stocks after gold, silver, and copper prices slumped. In addition, Alphabet fell by more than -4% after Google was said to be months behind schedule in delivering its most powerful AI model.
While most chipmaking-related stocks retreated on Thursday, technology laggards such as software stocks rose as investors rotated into underperforming sectors. Also, trucking companies rallied after JB Hunt Transport Services reported stronger-than-expected Q2 revenue, and Abbott Laboratories soared by more than +10% after raising its full-year adjusted EPS forecast.
Thursday’s US economic reports were generally positive for the economy but hawkish on Fed policy, pushing bond yields higher; the 10-year T-note yield is up by +2 bp to 4.57%.
US weekly initial unemployment claims unexpectedly fell -8,000 to a 10-week low of 208,000, showing a stronger labor market than expectations of an increase to 217,000.
US Jun retail sales rose +0.2% m/m, right on expectations. However, Jun retail sales ex-autos fell -0.2% m/m, weaker than expectations of -0.1% m/m.
The US Jul Philadelphia Fed business outlook survey rose +31.1 to a 4.5-year high of 41.4, stronger than expectations of 12.5.
US Jun pending home sales fell -5.4% m/m, weaker than expectations of -0.5% m/m and the steepest decline in 6 months.
The US Jul NAHB housing market index unexpectedly fell -2 to 34, weaker than expectations of no change at 35.
Fed comments on Thursday were hawkish and negative for stocks and bonds. Kansas City Fed President Jeff Schmid said, "his primary concern is inflation, which is too hot and has been above target for too long. As such, my focus remains on inflation in setting the correct course for monetary policy." Also, Dallas Fed President Lorie Logan said, "I currently believe modestly higher interest rates would better balance the outlook and risks" for the Fed's dual mandate of price stability and full employment.
Geopolitical risks remain as the US launched fresh airstrikes on Iran and struck a sanctioned Iranian oil tanker in the Persian Gulf. Iran responded by firing upon American bases in Kuwait and Jordan, with the Jordanian government saying it intercepted eight missiles. President Trump pledged to intensify the bombardment until Iran stops attacking ships in the Strait of Hormuz and agrees to open the waterway.
The Wall Street Journal reported on Thursday that President Trump is leaning toward expanding military operations and discussed the seizure of Kharg Island, Iran’s main oil export terminal. According to RBC Capital Markets LLC, a seven-day moving average of oil flows through the Strait of Hormuz has slumped to 3.9 million bpd from 8.5 million bpd before the collapse of the ceasefire.
The outlook for strong Q2 earnings, which began 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 10% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.
Overseas stock markets settled mixed on Thursday. The Euro Stoxx 50 recovered from a 1-week low and closed up +0.29%. China's Shanghai Composite fell to a 3.5-month low and closed down -1.85%. Japan's Nikkei-225 Stock Average closed down -2.79%.
Interest Rates
September 10-year T-notes (ZNU6) on Thursday closed down -5 ticks, and the 10-year T-note yield rose +2.0 bp to 4.567%. Stronger-than-expected US economic reports on Thursday weighed on T-note prices after weekly initial unemployment claims unexpectedly fell to a 10-week low and the Jul Philadelphia Fed business outlook survey rose more than expected to a 4.5-year high. T-notes were also under pressure amid hawkish comments from Kansas City Fed President Jeff Schmid and Dallas Fed President Lorie Logan, who said they favored tighter Fed policy to bring down inflation. T-notes recovered from their worst levels after stocks retreated, which boosted safe-haven demand for T-notes.
European government bond yields moved higher on Thursday. The 10-year German bund yield rose to a 1.75-month high of 3.164% and finished up +1.2 bp to 3.134%. The 10-year UK gilt yield rose +2.8 bp to 4.966%.
UK May monthly GDP rose +0.1% m/m, stronger than expectations of no change m/m.
UK May manufacturing production unexpectedly rose +0.1% m/m, stronger than expectations of a -0.2% m/m decline.
Swaps are discounting a 7% chance of a +25 bp ECB rate hike at its next policy meeting on July 23.
US Stock Movers
Chipmakers and AI-infrastructure stocks sold off on Thursday, weighing on the broader market. The iShares Semiconductor ETF (SOXX) fell to a 5-week low, closing down more than -4%. SanDisk (SNDK) closed down more than -12% to lead losers in the S&P 500, and Seagate Technology Holdings Plc (STX) closed down -10%. Also, Western Digital (WDC) closed down more than -9%, and Marvel Technology (MRVL) closed down more than -8%. In addition, ARM Holdings Plc (ARM), Intel (INTC), Micron Technology (MU), Advanced Micro Devices (AMD), Microchip Technology (MCHP), and Broadcom (AVGO) closed down more than -5%, and Lam Research (LRCX) and Qualcomm (QCOM) closed down more than -4%.
Cloud infrastructure stocks slumped on Thursday. Nebius Group NV (NBIS) closed down more than -13% to lead losses in the Nasdaq 100, and Applied Digital (APLD) closed down more than -8%. Also, Oracle (ORCL) closed down more than -6%, and CoreWeave (CRWV) closed down more than -5%.
Mining stocks fell on Thursday as gold, silver, and copper prices sold off. Coeur Mining (CDE) closed down more than -6%, and Hecla Mining (HL) closed down more than -5%. Also, Freeport McMoran (FCX) and Newmont Corp (NEM) closed down more than -4%, and Anglogold Ashanti (AU), Barrick Mining (B), and Southern Copper (SCCO) closed down more than -3%.
Cryptocurrency-exposed stocks slid on Thursday along with Bitcoin (^BTCUSD). Galaxy Digital Holdings (GLXY) closed down more than -9%, and MARA Holdings (MARA) and Circle Internet Group (CRCL) closed down more than -7%. Also, Riot Platforms (RIOT) closed down more than -6%, Coinbase Global (COIN) closed down more than -4%, and Strategy (MSTR) closed down more than -3%.
JB Hunt Transport Services (JBHT) is up more than +8% to lead trucking companies higher after reporting Q2 revenue of $3.50 billion, better than the consensus of $3.25 billion. Also, FedEx Freight Holding (FDXF) and XPO Inc (XPO) closed up more than +7%, and ArcBest (ARCB) closed up more than +6%. In addition, Saia Inc (SAIA), Old Dominion Freight Line (ODFL), and Knight-Swift Transportation Holdings (KNX) closed up more than +5%, and CH Robinson Worldwide (CHRW) closed up more than +4%. Finally, Marten Transport Ltd (MRTN) and United Parcel Service (UPS) closed up more than +3%.
AST SpaceMobile (ASTS) closed down more than -17% after announcing its intent to offer $1.0 billion of convertible senior notes due 2034 in a private offering.
Alphabet (GOOGL) closed down more than -4% after Google was said to be months behind schedule on delivering its most powerful AI model.
GE Aerospace (GE) closed down more than -4% despite the company raising its adjusted earnings per share guidance for the full year after TD Cowen said the raise “may not be good enough.”
United Airlines Holdings (UAL) closed down more than -1% after forecasting full-year adjusted EPS of $9 to $11, the midpoint below the consensus of $10.51.
Abbott Laboratories (ABT) closed up more than +10% to lead gainers in the S&P 500 after raising its full-year adjusted EPS forecast to $5.45 to $5.60 from a previous forecast of $5.38 to $5.58, the midpoint above the consensus of $5.48.
AeroVironment (AVAV) closed up more than +5% after Raymond James upgraded the stock to outperform from neutral with a price target of $210.
Merck & Co (MRK) closed up more than +3% after the USDA approved the company’s Lipfendra medication pill to reduce LDL cholesterol.
Rocket Cos (RKT) closed up more than +2% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $19.
UnitedHealth Group (UNH) closed up more than +1% after reporting Q2 adjusted EPS of $6.38, well above the consensus of $4.89, and raising its full-year adjusted EPS estimate to $19.50 to $20.00 from a previous estimate of above $18.25.
Earnings Reports(7/17/2026)
Fifth Third Bancorp (FITB), Regions Financial Corp (RF), Travelers Cos Inc/The (TRV), Truist Financial Corp (TFC).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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