Morning in New York: TSMC Will Set the Tone for Stock Prices

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Capital Markets Research at Freedom Broker.

The semiconductor sector entered today’s session on a weak note. Yesterday, the SMH sector ETF lost 1.6%. Asian chipmakers continued to decline today, following the lead of their U.S. counterparts. SK Hynix shares fell 12% in Seoul, completely erasing the previous day’s gains. Samsung Electronics dropped nearly 9%. Advantest and Tokyo Electron shares were also hit by the sell-off. These moves can be interpreted as profit-taking following a prolonged rally. Reports that CoreWeave is exploring the use of financial derivatives to hedge against falling memory chip prices remain a negative factor, indicating concerns that the current cycle may be peaking. We believe it is premature to draw such conclusions, given the structural imbalance between supply and demand, which could intensify in the second half of the year.

Market momentum during the upcoming session will largely be determined by the reaction to Taiwan Semiconductor’s (TSM) results, which were released before the start of regular trading. The company sets the benchmark for demand for accelerators and utilization of cutting-edge manufacturing processes across the entire AI supply chain; however, expectations are set high, so simply beating consensus estimates may not be enough to resume growth. The key factor will be the outlook, which will indicate whether order visibility extends beyond the next few quarters. The market’s reaction to TSMC’s earnings release could prove irrelevant, which would affect the entire industry.

The foreign policy situation remains tense. U.S. Central Command reported a new series of strikes against Iran, targeting military facilities used to threaten ships in the Strait of Hormuz. President Donald Trump stated that Tehran had requested a meeting, but the Iranian side has expressed its readiness to continue hostilities, though it does not rule out diplomatic solutions. Some shipowners, following the U.S. government’s recommendation, are refusing to transit the strait. Market participants continue to hope that the parties will return to the negotiating table, although analysts warn of the risk of a protracted standoff and a continuing energy crisis.

The main macroeconomic release this Thursday will be the retail sales figures for June. The consensus forecast calls for a 0.3% month-over-month increase in the overall figure, following a 0.9% rise the previous month; sales excluding autos are expected to remain flat after a 0.8% increase; and the core index is forecast to rise by 0.5% following a 0.7% increase in May. The release will help distinguish the effect of lower gasoline prices from the state of consumer demand. A slowdown in sales growth for the benchmark group would indicate that households are cutting back on spending. Also to be released are the Philadelphia Fed’s Manufacturing Activity Index for July (consensus: 11.5 points, June: 10.3) and weekly initial jobless claims data (consensus: 217,000, previous reading: 215,000).

UnitedHealth Group (UNH) has reported its quarterly results, and GE Aerospace (GE), Abbott Laboratories (ABT), U.S. Bancorp (USB), Prologis (PLD), and State Street (STT) are also set to release their results before the market opens. After the market closes, Netflix (NFLX), Intuitive Surgical (ISRG), Alcoa (AA), and F.N.B. Corporation (FNB) will release their earnings reports.

Futures on U.S. stock indices are showing a slightly negative trend. We assess the risk outlook for the upcoming session as neutral, with elevated volatility.

— Eos Energy Enterprises (EOSE) shares are up more than 8% after the company was awarded a contract under the Golden Dome for America program. The agreement with the U.S. Department of Defense calls for the integration of long-duration energy storage systems into defense infrastructure, and the Z3 zinc technology will be deployed as a prototype at a critical facility.

— Shares of J.B. Hunt Transport Services (JBHT) are up about 8% following the release of its quarterly report. The company’s revenue increased 19% year-over-year to $3.5 billion, beating the consensus estimate of $3.26 billion, while earnings per share came in at $1.91 versus the consensus estimate of $1.74. Intermodal shipping volumes set a new quarterly record.

— Home BancShares (HOMB) shares are up 2.4% following the release of its quarterly earnings report. Adjusted earnings per share came in at $0.64, compared with the expected $0.62, and revenue, excluding interest expenses, reached $295.1 million, also exceeding market expectations.

— AST SpaceMobile (ASTS) shares are down about 13% following the announcement of a $1 billion offering of senior convertible bonds maturing in 2034, along with an option for an additional $150 million. The coupon rate is 1.625% with a conversion price of approximately $79.57 per share, which poses a risk of dilution.

· Karooooo (KARO) shares are down about 2% in response to the earnings report. The company’s revenue increased by 22% year-over-year, and the Cartrack segment added a record 142,500 new subscribers. The confirmation of the annual guidance without an upward revision fell short of expectations following the stock’s rally of approximately 11% over the past month.

— United Airlines (UAL) shares are down 2.4%, even though earnings per share of $1.99 and revenue of $17.67 billion beat consensus estimates, and the full-year EPS guidance was raised from $7–11 to $9–11. Pressure on the stock price came from a $2.3 billion increase in fuel costs (+84% year-over-year). High jet fuel prices will continue to weigh on the company’s profitability in the coming quarters.

Trading on July 15 on U.S. stock markets ended with mixed results. The S&P 500 gained 0.38%, the Dow Jones rose 0.29%, the Russell 2000 climbed 0.39%, and the NASDAQ 100 fell 0.28%.

Most of the “Magnificent Seven” stocks closed firmly in positive territory. The exceptions were Nvidia (NVDA: +0.33%) and Tesla (TSLA: -0.43%). Telecom stocks (XLC: +1.73%) led the gains. The IT sector (XLK: -1.11%) was the underperformer: chipmakers and suppliers of AI infrastructure equipment came under pressure again, giving back the gains from the previous session. Meanwhile, ASML Holding’s (ASML: +2.23%) earnings report exceeded market expectations. In addition to technical factors, market participants point to pricing dynamics in the memory chip segment and growing resistance to data center construction, including a ban introduced in New York State.

The core Producer Price Index (PPI) for June rose 0.2% month-over-month, which was below the consensus estimate, while the May figure was revised downward. The overall index fell by 0.3% MoM amid a significant drop in energy prices. The New York Fed’s Manufacturing Activity Index for July rose to 15.6 points, exceeding average forecasts. The employment component reached its highest level since December 2022, while both price sub-indices declined over the month, though they remained at elevated levels. The Fed’s “Beige Book” reported weak or moderate growth in economic activity in all but one district. The central bank noted that rising fuel prices are holding back spending in other categories.

On the second day of congressional hearings, Federal Reserve Chairman Kevin Warsh did not offer any significant signals, emphasizing that he had repeatedly assured Donald Trump of his commitment to the regulator’s independence. John Williams, President of the Federal Reserve Bank of New York, noted encouraging signs that inflation has peaked and suggested it could slow in the coming quarters, although he still considers the current level to be high. Board Member Lisa Cook stated her readiness to act if there are no signs of disinflation on the horizon.

WTI crude oil rose 0.3%. Gold prices fell 0.4%, while silver prices dropped 2.8%.

— PayPal (PYPL: +17.21%) has received a joint buyout offer from Stripe and Advent International at $60.50 per share. This price represents a 28% premium to the closing price on July 14 and values the company at more than $53 billion.

— BlackRock’s (BLK: +6.63%) earnings per share (EPS), operating income, and revenue for the second quarter exceeded expectations. The consulting, administration, and lending segment made the most significant contribution to this result. Net inflows and assets under management also exceeded market consensus estimates. Analysts specifically noted the growth potential of average fees and the support provided by fixed-income instruments.

— Alibaba Group’s (BABA: +4.78%) AI model, Qwen, will be integrated into Apple Intelligence in the Chinese market. Earlier, the Cyberspace Administration of China approved the use of this platform on the iPhone.

— Cintas’ (CTAS: +4.36%) fourth-quarter earnings, revenue, and margins exceeded market expectations, and organic revenue growth accelerated compared to the previous quarter. The revenue forecast for fiscal year 2027 exceeded the consensus, and management confirmed that the acquisition of UniFirst will close in the second half of the year.

— Progressive’s (PGR: -9.43%) earnings per share for June were lower than last year’s. Net written and earned premiums rose year-over-year, but the combined ratio also increased. Growth in the number of policies in the personal auto insurance segment slowed compared to May, and losses from catastrophic claims increased.

— Elevance Health (ELV: -8.54%) reported second-quarter revenue and earnings per share that exceeded consensus estimates, thanks to strong results from its Medicare Advantage and Marketplace divisions. Full-year EPS guidance was raised. However, the number of insured members declined year-over-year, and the operating margin narrowed due to lower profitability in the Health Benefits segment.

This article was AI-translated and verified by a human editor