September Nasdaq 100 E-Mini futures (NQU26) are down -1.61% this morning as the global selloff in chip stocks deepened.
The selloff in stocks tied to the AI buildout continued to ripple across global markets. Taiwan’s benchmark Taiex and Japan’s Nikkei Stock Average slid into technical correction territory on Friday, battered by heavy selling in AI-related shares amid concerns that their valuations have become too stretched following a historic rally in the first half of the year. Also hurting AI-related stocks was a surprise breakthrough from Chinese AI startup Moonshot, which said its Kimi K3 model could compete with the strongest offerings from OpenAI and Anthropic PBC, prompting investors to draw parallels with last year’s “DeepSeek moment.” U.S. chip and AI infrastructure stocks slid in pre-market trading.
Netflix (NFLX) also weighed on sentiment, with shares sinking more than -9% in pre-market trading after the streaming giant reported weaker-than-expected Q2 revenue and projected a second consecutive quarter of slowing sales growth.
In addition, sentiment was hit by escalating tensions in the Middle East. American forces carried out a sixth straight night of strikes aimed at degrading Iran’s ability to attack commercial shipping in the Strait of Hormuz, targeting coastal surveillance and air defense sites, military logistics infrastructure, and maritime assets. Iran retaliated by launching attacks on U.S. bases in Kuwait, Jordan, and Bahrain. The price of WTI crude rose over +2% on Friday.
Investors are now awaiting a slew of U.S. economic data.
In yesterday’s trading session, Wall Street’s major indices ended in the red. Chip and AI infrastructure stocks tumbled, with Sandisk (SNDK) sinking over -12% to lead losers in the S&P 500 and Marvell Technology (MRVL) slumping more than -8%. Also, mining stocks dropped as metal prices sank, with Coeur Mining (CDE) sliding over -7% and Hecla Mining (HL) falling more than -6%. In addition, AST SpaceMobile (ASTS) tanked more than -17% after the satellite broadband company priced a $1 billion private offering of 1.625% convertible senior notes due 2034. On the bullish side, Abbott Laboratories (ABT) jumped over +10% and was the top percentage gainer on the S&P 500 after the medical device maker posted better-than-expected Q2 results and raised its full-year adjusted EPS guidance.
Economic data released on Thursday showed that U.S. retail sales rose +0.2% m/m in June, in line with expectations, while core retail sales, which exclude motor vehicles and parts, fell -0.2% m/m, weaker than expectations of no change m/m. Also, the U.S. Philly Fed manufacturing index rose to a 4-1/2-year high of 41.4 in July, stronger than expectations of 12.7. In addition, the number of Americans filing for initial jobless claims in the past week unexpectedly fell by -8K to a 10-week low of 208K, compared with the 216K expected. Finally, U.S. pending home sales fell -5.4% m/m in June, weaker than expectations of -0.5% m/m.
“Despite challenges, consumers are still spending, and the labor market shows no signs of cracking. This type of data won’t move the Fed’s needle either way, but it underscores the ongoing resilience of the U.S. economy,” said Ellen Zentner at Morgan Stanley Wealth Management.
Fed Vice Chair Philip Jefferson said on Thursday that the central bank should consider raising interest rates if inflation does not cool soon, but added that monetary policy is well positioned for now. Also, Dallas Fed President Lorie Logan said she believes policymakers should raise interest rates, noting that inflation does not appear to be on a sustainable path back to the Fed’s 2% target. “I currently believe modestly higher interest rates would better balance the outlook and risks,” Logan said. In addition, Kansas City Fed President Jeff Schmid said inflation remains his biggest concern given the risk of a further acceleration in the coming months. “My 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 policy,” Schmid said.
Meanwhile, U.S. rate futures have priced in an 88.9% probability of no rate change and an 11.1% chance of a 25 basis point rate hike at July’s monetary policy meeting.
Today, investors will focus on the University of Michigan’s U.S. Consumer Sentiment Index, which is set to be released in a couple of hours. Economists forecast that the preliminary July figure will come in at 51.0, compared to 49.5 in June.
U.S. Industrial Production and Manufacturing Production data will also be released today. Economists project industrial production to rise +0.2% m/m and manufacturing production to rise +0.1% m/m in June, compared to the May figures of +0.1% m/m and unchanged m/m, respectively.
U.S. Building Permits (preliminary) and Housing Starts data will be reported today. Economists expect June Building Permits to be 1.400 million and Housing Starts to be 1.310 million, compared to the May figures of 1.410 million and 1.177 million, respectively.
The U.S. Import and Export Price Indexes will be released today as well. Economists expect the import price index to drop -0.7% m/m and the export price index to fall -0.4% m/m in June, compared to the previous month’s figures of +1.9% m/m and +1.3% m/m, respectively.
On the earnings front, property and casualty insurer Travelers (TRV), along with regional banks Truist Financial (TFC), Fifth Third Bancorp (FITB), and Regions Financial (RF), are set to report their quarterly results today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +24% jump in quarterly earnings for Q2 compared to the previous year.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.53%, down -0.59%.
The Euro Stoxx 50 Index is down -1.30% this morning as a global selloff in AI-related stocks and escalating tensions in the Middle East dampened risk appetite. Chip stocks cratered on Friday, tracking a selloff in their Asian peers. Bank stocks also slumped. At the same time, utilities and luxury stocks advanced. The benchmark index is on track to end the week lower. Final data from Eurostat confirmed on Friday that the Eurozone’s annual inflation rate eased to 2.8% in June. Separately, data showed that the Eurozone’s seasonally adjusted current account surplus widened in May as higher primary income offset a narrower trade surplus. Meanwhile, Eurozone government bond yields edged lower on Friday but were on track for a weekly gain, as the rebound in energy prices prompted traders to price in the possibility that the European Central Bank may need to deliver more than one additional rate hike this year. In corporate news, EQT (EQT.S.DX) jumped more than +11% after the Swedish buyout group posted better-than-expected first-half earnings and raised guidance for its fundraising cycle.
Eurozone’s CPI, Eurozone’s Core CPI, and Eurozone’s Current Account data were released today.
Eurozone’s June CPI fell -0.1% m/m and rose +2.8% y/y, in line with expectations.
Eurozone’s June Core CPI rose +0.2% m/m and +2.4% y/y, in line with expectations.
Eurozone’s May Current Account came in at 25.1 billion euros, stronger than expectations of 18.1 billion euros.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -3.05%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -4.03%.
China’s Shanghai Composite Index closed sharply lower and hit a 10-month low today amid a broad selloff in technology stocks. Semiconductor and other AI-related stocks cratered on Friday as investors positioned for the blockbuster listing of CXMT Corp. The Chinese memory chip giant said late on Thursday that its IPO was 243.93 times oversubscribed in the “online” retail portion of the offering. “CXMT is sucking in too much money, and investors are voting with their feet. For tech stocks, it’s a disaster,” said Stephen Huang, a Shanghai-based hedge fund manager. The selloff in AI stocks also came as concerns mounted over their stretched valuations. In addition, sentiment was hit by escalating attacks between the U.S. and Iran. The Star 50 Index’s fear/greed indicator, which measures selling pressure relative to buying pressure, fell to its most negative level since the board was launched in mid-2020. Meanwhile, the Shanghai Composite Index posted its biggest weekly decline in more than two years. Elsewhere, President Xi Jinping praised China’s progress in developing low-cost AI at the World AI Conference in Shanghai. However, he stopped short of making any market-boosting announcements. In corporate news, Montage Technology sank more than -13%, extending yesterday’s losses after the AI chipmaker confirmed that South Korean prosecutors had raided its Korean office over a possible violation of competition laws.
Japan’s Nikkei 225 Stock Index closed sharply lower today as investors continued to rotate out of technology stocks amid concerns that the AI rally may be overextended. Chip and other AI-related stocks led the declines on Friday, tracking overnight losses in their U.S. peers. Kioxia Holdings was the Nikkei’s biggest percentage loser, plunging more than -16% for its sharpest one-day drop since November 2025. The memory chipmaker’s market cap has been cut in half in just a month since it briefly became the nation’s most valuable company. Tech investor SoftBank Group sank over -9%, and semiconductor gear maker Tokyo Electron slumped more than -8%, also weighing heavily on the Nikkei. “The selloff is far steeper than what we’re seeing in the U.S. market. With South Korea’s market closed today, investors haven’t been able to digest semiconductor-related concerns there, so some may be using the Japanese market as a hedge instead,” said Yugo Tsuboi at Daiwa Securities. Meanwhile, the benchmark index closed more than 10% below its June 25th peak on Friday, marking a technical correction. The index also posted its biggest weekly loss since April 2025. Elsewhere, Japanese government bonds rose on Friday as a slump in the equity market likely prompted investors to shift funds into safe-haven domestic government debt, while the yen was little changed even as Japan’s Finance Minister Satsuki Katayama renewed her warning of possible intervention. In corporate news, Seven & I Holdings rose over +3% after the retailer said it was in talks to buy a stake in Polish convenience store operator Zabka Group. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +14.22% to 36.86.
Pre-Market U.S. Stock Movers
The Magnificent Seven stocks fell in pre-market trading, with Nvidia (NVDA) dropping over -2% and Meta Platforms (META) sliding more than -1%.
Chip and AI infrastructure stocks slid in pre-market trading, with Sandisk (SNDK) and Intel (INTC) falling over -4%.
Netflix (NFLX) sank more than -9% in pre-market trading after the streaming giant reported weaker-than-expected Q2 revenue and projected a second consecutive quarter of slowing sales growth.
Intuitive Surgical (ISRG) tumbled over -11% in pre-market trading after the company left its full-year da Vinci procedure growth guidance unchanged, disappointing investors.
SpaceX (SPCX) fell more than -3% in pre-market trading after the company called off a planned test flight of its Starship rocket.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - July 17th
The Travelers Companies (TRV), Truist Financial (TFC), Fifth Third Bancorp (FITB), Regions Financial (RF), Republic Bancorp (RBCAA), Bank First (BFC), South Plains Financial (SPFI), Chemung Financial (CHMG).
On the date of publication, Oleksandr Pylypenko 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.
