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July 16, 2026 - 16:47
4 minutes
(Bloomberg) — A selloff in chipmakers weighed on stocks amid concerns over whether massive artificial-intelligence investments will justify lofty valuations while higher oil prices lifted bond yields.Wall Street’s best-performing corner this year was gripped by volatility that sent a gauge of semiconductor firms lower by 3%. A solid outlook from Taiwan Semiconductor Manufacturing Co. failed to inspire investors after the main chipmaker for Nvidia Corp. raised its spending plans. The Nasdaq 100 fell about 1%. While most S&P 500 shares rose, the index wavered.Traders are grappling with whether tech stocks have grown too richly valued amid all the uncertainty over when trillions of dollars in spending will deliver lucrative returns. The four biggest US AI operators including Meta Platforms Inc. and Alphabet Inc. are expected to spend more than $725 billion this year alone.The fact that TSMC is seeing such a negative response to strong earnings must be raising concerns about this all-important leadership group among investors, according to Matt Maley at Miller Tabak.“The action in the chip stocks going forward is still the most-important issue for the stock market,” he said. “They are definitely showing some meaningful cracks, so they’re going to have to see a strong and sustainable rebound soon or it will raise some raise some real warning flags.”Heightened geopolitical threats also kept a lid on risk appetite, with the US intensifying strikes against Iran, hitting an oil tanker near the country’s main export terminal. Brent topped $85, deepening inflation worries and rekindling bets that the Federal Reserve’s next rate move will be a hike.Traders also parsed some key economic reports. Jobless claims fell last week while retail sales rose modestly in June, dragged down by a drop in gas-station receipts that masked strong gains at some merchants.“Despite challenges, consumers are still spending and the labor market shows no signs of cracking,” said Ellen Zentner at Morgan Stanley Wealth Management “This type of data won’t move the Fed’s needle either way, but it underscores the ongoing resilience of the US economy.”Consumer spending is a critical engine, and investors want to see households continue opening their wallets, according to Bret Kenwell at eToro. June’s retail sales report was not particularly robust, but it was not a red flag either — especially given the upward revision to May, he said.“Earnings should help separate signals from noise, revealing whether consumers remain resilient or are finally starting to pull back,” Kenwell concluded.Corporate Highlights:Bank of America Corp. Chief Executive Officer Brian Moynihan joined the chorus of Wall Street leaders saying that AI models such as Anthropic PBC’s Mythos are raising serious concerns. UnitedHealth Group Inc. boosted its outlook for the year and reported quarterly profit well ahead of Wall Street’s views. Abbott Laboratories raised its profit guidance following a solid second quarter driven by improved performance across most of its business lines. Merck & Co. won US regulatory approval of a pill that rivals powerful injections for cutting dangerous cholesterol levels. JB Hunt Transport Services Inc.’s earnings signaled stronger freight rates and tighter trucking capacity are starting to flow through to earnings. Uber Technologies Inc. agreed to buy Delivery Hero SE in a deal that values the German company at $14.8 billion. Eli Lilly & Co. agreed to buy AtaiBeckley Inc. for as much as $3.8 billion, underscoring interest in the once-fringe area of psychedelic medicine. Some of the main moves in markets:StocksThe S&P 500 was little changed as of 10:44 a.m. New York time The Nasdaq 100 fell 0.8% The Dow Jones Industrial Average rose 0.2% The Stoxx Europe 600 fell 0.2% The MSCI World Index fell 0.2% CurrenciesThe Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.2% to $1.1444 The British pound fell 0.3% to $1.3501 The Japanese yen fell 0.1% to 162.43 per dollar CryptocurrenciesBitcoin fell 0.5% to $64,628.14 Ether fell 1.9% to $1,885.43 BondsThe yield on 10-year Treasuries advanced four basis points to 4.59% Germany’s 10-year yield advanced three basis points to 3.15% Britain’s 10-year yield advanced four basis points to 4.98% CommoditiesWest Texas Intermediate crude rose 0.4% to $79.90 a barrel Spot gold fell 1.4% to $4,003.45 an ounce ©2026 Bloomberg L.P.
