On Friday, the S&P 500 Index ($SPX) (SPY) closed down -1.01%, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -0.77%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.49%. September E-mini S&P futures (ESU26) fell -1.02%, and September E-mini Nasdaq futures (NQ26) fell -1.51%.
Stock indexes closed sharply lower on Friday, with the S&P 500 at a 1-week low, the Dow Jones Industrials at a 2.5-week low and the Nasdaq 100 at a 5-week low. The global selloff in chip makers continued on Friday amid concerns that the massive profits made from building artificial intelligence have gone too far to justify their lofty valuations. The losses in Asia began with China’s Shanghai Composite falling -3% and Japan’s Nikkei stock index falling -4% after Chinese AI startup Moonshot launched its new Kimi K3 AI model, which the company says competes with the strongest offerings from OpenAI and Anthropic PBC, raising concerns about industry spending. Losses in Magnificent Seven Technology shares also weighed on the overall market.
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On the positive side for stocks, the University of Michigan’s July consumer sentiment index rose more than expected to a 5-month high, and 1-year inflation expectations fell more than expected. Besides, energy stocks gained amid surge in crude oil prices to 5-week high.
Friday’s US housing news was mixed. Housing starts increased +19.0% m/m in June to 1.427 million, stronger than expectations of 1.310 million. However, June building permits, a proxy for future construction, fell -3.0% to 1.367 million, below expectations of 1.403 million.
US June manufacturing output was unchanged m/m, weaker than expected by +0.1% m/m.
The US June import price index ex-petroleum rose +0.5% m/m, stronger than expected +0.4% m/m.
The University of Michigan US July consumer sentiment index rose +4.9 to a 5-month high of 54.4, stronger than expected at 51.0.
July 1-year inflation expectations for the University of Michigan fell to 4.2% from 4.6% in June, weaker than expectations of 4.4%. July 5-10-year inflation expectations were unchanged from June at 3.3%, right on expectations.
Cleveland Fed President Beth Hammack’s sharp comments Friday were negative for stocks and bonds, as she said persistently high inflation is her biggest concern right now, even though consumer spending is up and unemployment remains low.
Geopolitical risks continue, as WTI crude oil (CLQ26) rose more than +4% as the US launched new strikes against Iran for the sixth consecutive day on Friday, hitting coastal surveillance and air defense sites, military logistics infrastructure and maritime assets. Iran responded by attacking US bases in Kuwait, Jordan and Bahrain, with Kuwait saying desalination and power plants were affected, with several power generation units damaged. The Kuwaiti armed forces said it intercepted 32 Iranian drones targeting “vital” institutions. Crude oil prices hit their highest level on Friday afternoon after Axios reported that the Trump administration informed Israel it was sending more refueling planes to the country, a possible sign that US military operations could expand in the coming days.
President Trump promised to intensify bombing until Iran stops attacking ships in the Strait of Hormuz and agrees to open the waterway. The Wall Street Journal reported that US forces attacked several bridges to cut off supply routes to the Iranian port city and a naval base used to support attacks on ships in the Strait of Hormuz. The seven-day moving average of oil flows through the Strait of Hormuz has declined to 3.9 million bpd from 8.5 million bpd before the collapse of the ceasefire, according to RBC Capital Markets LLC.
Selling by corporate insiders is another negative for the stock. Executives sold $77.6 billion of stocks during the first half of this year, the second-highest amount in more than 20 years, according to EPFR Global Market Intelligence.
The prospect of strong second-quarter earnings, which began this week, is a bullish factor for stocks. Forecasts compiled by Bloomberg Intelligence suggest second-quarter earnings could grow +23%, close to the first quarter’s strong +30% earnings, which was more than double the +12% analysts were expecting. With AI spending expected to account for the majority of earnings, AI infrastructure stocks are set to contribute nearly 60% of the S&P 500’s earnings per share growth in the second quarter.
Markets are discounting a +14% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.
Foreign stock markets closed with heavy losses on Friday. The Euro Stoxx 50 slipped to a 1-week low and closed down -0.84%. China’s Shanghai Composite hit a 10.5-month low and closed down -3.05%. Japan’s Nikkei-225 stock average fell to a 5-week low and closed down -4.03%.
interest rates
September 10-year T-notes (ZNU6) closed at +4 ticks on Friday, and the 10-year T-note yield fell -0.8bp to 4.545%. September T-notes climbed to a 1.5-week high on Friday, and the 10-year T-note yield fell to a 1.5-week low of 4.509%. Friday’s slump in global equity markets boosted safe-haven demand for T-notes. Gains in T-notes were limited after US June housing starts and consumer sentiment rose more than expected, and inflation expectations rose as WTI crude oil rose more than +4% to a 5-week high.
European government bond yields edged lower on Friday. The 10-year German Bund yield fell -0.8bp to 3.126%. 10-year UK gilt yields fell -1.5bp to 4.951%.
The swaps are discounting an 8% chance of a +25bp ECB rate hike at its next policy meeting on July 23.
US Stock Movers
Chipmaker and AI-infrastructure stocks were off for a second day on Friday, lagging the broader market. The iShares Semiconductor ETF (SOXX) fell to a 1.75-month low and closed down more than -1%. Applied Materials (AMAT) closed down more than -5%, and KLA Corp (KLAC) and Sandisk (SNDK) closed down more than -3%. Additionally, Intel (INTC), Lam Research (LRCX), ASML Holding NV (ASML), and Texas Instruments (TXN) closed down more than -2%.
Magnificent Seven Technology shares fell mostly on Friday, which had an impact on the entire market. Meta Platform (META), Alphabet (GOOGL), Nvidia (NVDA), and Tesla (TSLA) closed down more than -2%, and Microsoft (MSFT) and Amazon.com (AMZN) closed down more than -1%. Reversing the trend, Apple (AAPL) closed +0.09% higher.
Energy stocks and service providers rose on Friday amid a surge in crude oil prices. Valero Energy (VLO) closed up more than +3%, and APA Corp. (APA), Diamondback Energy (FANG), Marathon Petroleum (MPC), Occidental Petroleum (OXY), and Phillips 66 (PSX) closed up more than +2%. Additionally, Chevron (CVX), ConocoPhillips (COP), and Devon Energy (DVN) closed up more than +1%.
Intuitive Surgical (ISRG) closed down more than -14%, leading the losers in the S&P 500 and Nasdaq 100 after maintaining its full-year forecast despite reporting better-than-expected Q2 earnings results.
STAAR Surgical (STAA) closed down more than -9% after reporting preliminary Q2 net sales of $90.0 million, below the consensus estimate of $90.2 million.
Netflix (NFLX) closed down more than -7% after estimating full-year revenue of $51 billion to $51.4 billion, the midpoint below the consensus of $51.38 billion.
Autoliv (ALV) closed down more than -4% after reporting Q2 adjusted EPS of $2.43, falling short of the $2.45 consensus.
Coca-Cola (KO) closed down more than -3% in the Dow Jones Industrials after it said it has temporarily suspended production operations at its Fairlife Milk in the US after an unauthorized third party gained access to some of its systems.
International Business Machines (IBM) closed down more than -2% after Citigroup lowered its price target on the stock from $375 to $255.
Travelers Cos (TRV) led the S&P 500 and Dow Jones Industrials with gains of more than 9% after reporting second-quarter net premiums of $11.53 billion, above the consensus estimate of $11.409 billion.
Jazz Pharmaceuticals PLC (JAZ) closed up more than +2% after Canaccord Genuity initiated coverage of the stock with a buy recommendation and a price target of $290.
Construction Partners (ROAD) closed up more than +1% after S&P Dow Jones Indices announced the company would replace Molina Healthcare in the S&P SmallCap 600 before the start of trading on Wednesday, July 22.
Earnings Report(7/20/2026)
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On the date of publication, Rich Asplund did not have (directly or indirectly) any positions in any securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy here for more information.
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