Week ended July 17, 2026: semi-conductor shares remain under pressure

This past week investors were mostly focused on earnings and US inflation economic data.  Fed talking heads were also on the circuit, including Fed Chair Kevin Warsh who appeared  before Congress to present the Semi-annual Monetary Policy Report and to answer questions about monetary policy before sub-committees in the House and the Senate.  The US–Iran war continued to spiral downhill with the Strait of Hormuz once again closed.

Most asset classes felt the effects of an increase in overall market risk.  Oil markets are certainly feeling the strain, as oil prices spiked once again (WTI +15.5% WoW).  This affected sentiment in the bond market as long-term inflation concerns resurfaced, even though June CPI came in better than consensus expectations (noting that this read is already stale now with oil prices heading higher again).  US stock indices finished the week in the red across the board.  Asian stocks were hit even harder with the A.I. trade – and specifically semi-conductor stocks – coming under renewed pressure.  The table below summarises WoW and YtD2026 performance of select global stock and bond indices, and select other assets.  More detailed tables can be found at the end of this update.

Earnings

The large U.S. banks – JPM, GS, BAC, WFC, MS and C – garnered most of the focus this past week, with all – as anticipated – delivering solid results off the back of soaring revenues from capital markets and investment banking business.  Moreover, none really sounded meaningful alarms as far as their outlooks, although this blistering pace will likely be difficult to maintain.  Nonetheless, generally weaker overall sentiment meant share performance was largely mixed across the banks.  In addition to the all-important banks, investors were also focused on benchmark names like pharma company JNJ (beat top/bottom lines and revised guidance higher), lithography maker (for semi-conductors) ASML (beat top/bottom lines, revised guidance higher), global leading semi-conductor foundry TSM (beat top/bottom lines, revised guidance higher), and streamer NFLX (met expectations but trimmed its guidance).  If you own some of these stocks, you can see their performance for the week in the table below.

Fed-speak

You can read Fed Chair Warsh’s formal opening comments to Congress here (from the Fed website). Mr Warsh remains skewed towards hawkishness in the face of persistently higher-than-target inflation data, although June’s CPI data probably brought some temporary relief.  PPI data was also slightly better than expected.  Away from Mr Warsh’s testimony, the most interesting comments during the week arguably came from Fed Governor Christopher Waller at the New York Association for Business Economics on Monday (here, from Fed website).   Gov Waller expressed similar concerns as Mr Warsh regarding too-high inflation, blaming it on the trifecta of tariffs, higher energy prices due to the war between the US and Iran, and “spillovers from demand for the AI buildout.”   He added that the US economy remains solid and the labour market is balanced.  I take these perspectives to mean that the Fed is much more concerned about inflation rather than the jobs market, and his will govern Fed policy in the months ahead.  The CME FedWatch Tool is now projecting a 25bps increase in the Fed Funds rate at either the September or October FOMC meeting, also consistent with the direction of travel of yields at the more policy-sensitive short end of the UST yield curve.

SpaceX: how’s it doing?

I provided my two cents regarding the IPO of SPCX a few days before its IPO in an article you can access on the EMC website here.  My expectation was that the stock would pop post-IPO, but would eventually settle below its IPO price as the reality of its rather absurd valuation sat in.  This has indeed been the trajectory, although it has come to pass much faster than I anticipated.  For investors that participated in the IPO and flipped their shares near the onset, well done!  For investors who still own the shares and are seriously interested in the long-term opportunity SpaceX offers, I suppose the best advice is to be patient.  Although the stock ran to as high of $225.64 (intraday, June 16^th, third day of trading), it has now fallen below its $135/share IPO price, closing Friday at $123.99/share.   I think that the shares have further to fall – perhaps much further – before they reach a level that (non-aspirational) investors believe represents fair value.  More supply will also cap any upside for the time being, as the insider lock ups are expected to begin expiring in early August, two days after the first earnings release (date not currently known).  As insiders begin to add to the miniscule public float, this will certainly put more downward pressure on these still-overvalued shares.  If you don’t own SPCX but would like to, I suggest that you be patient – you will have opportunities to buy SPCX well below its current price in the weeks and months ahead.

Semi-conductors: also a difficult week

Semi-conductor shares felt pressure all week in spite of great earnings and upward forward revisions from both benchmark “chip chain players” ASML and TSM.  For investors waiting on the froth to come off of the red hot chip sector, we are witnessing now why not to let FOMO grab you too soon.  It is a sector that has recently been subject to violent swings both ways, although until recently, the trajectory has been for stocks across the entire value chain to move higher.  Of course, watching this happen from the sidelines is not easy, and I am a prime example.  I mentioned in an article I wrote a couple of weeks ago (“Semi-conductors: the value-chain and exploring the opportunity”) that I would consider both TSM and SOXX (ETF) if prices slipped, and I acted on this mid-week by taking a position in TSM.  It is my first bite of this company because I have no foundry exposure, and I felt (perhaps wrongly) that memory-chip companies had simply run too far and too fast.  I took a small position in TSM and will add more on weakness although I intend to be patient.  The shares fell further in the latter half of the week, even following solid results for the company.  In retrospect, I wish of course that I had waited although timing the market perfectly is impossible.  Patience is a virtue and time will be the revealer of whether or not TSM –the dominant global foundry company – is over-valued.

What’s ahead

This coming week, investors will be focused on PMI data for July for the UK, Europe and the US, which will be released on Friday.  The week will also see the release of June inflation (CPI/PPI) and retail sales data for the UK.   

Earnings for the 2Q2026 continue, with two of the Mag 7 companies – TSLA and GOOG – releasing earnings this coming week.  INTC will also release earnings, and will be in focus as another marker as to how the semi-conductor sector is performing,  The table below provides some of the earnings releases in the coming weeks that most interest me.

This coming week, we begin a series of important central bank meetings, starting with the ECB on Thursday, and followed by the Fed, the BoE and the BoJ in the second half of the following week:

• European Central Bank (ECB): July 22-23

• FOMC (Fed): July 28-29

• Bank of England: June 30

• Bank of Japan: July 30-31

MARKET DATA AND TABLES

Below are tables of key indices and asset prices that have been updated for the past week. 

________________

**** Follow E-MorningCoffee on BlueSky, and please like and comment on my posts right here on my blog. You need to be a subscriber, so please sign up. Thanks for your support. ****