Mid-Morning Look

Thursday, July 16, 2026

U.S. stocks open lower as the S&P 500, Nasdaq, and Dow Jones come into the day with back to back advances, though tech stocks weaken led by another pullback in semiconductors (SOX). Busy morning of economic data as the Philly Fed Business Outlook and Jobless Claims beat estimates solidly, Retail Sales and Business Inventories were in-line, and Homebuilder Sentiment and Pending Home Sales missed. Technology (XLK) is the main standout to downside weighing on broader averages with the S&P 500 and Nasdaq lower, but 8 of 11 S&P sectors are actually higher, as investors rotate further out of momentum names (semis, data center, Ai, crypto, Aerospace) and into others. Healthcare (XLV) is up over 2% behind strong UNH results this morning while Consumer Staples (XLP) is up over +1.5% amid rotation into defensive stocks along with gains in Energy (XLE) and REITs (XLRE). Taiwan Semiconductor Manufacturing (TSM) drops 2% despite Q2 revenue surging 77% to T$706.6B as focus was on higher capex. Transport stocks are mixed, helped by trucking company JBHT earnings results, while airlines slide behind UAL results. In the Middle East, the U.S. conducted its fifth consecutive day of strikes against Iran, while strictly enforcing a naval blockade on Iranian ports. The WSJ reported top officials indicate that the President is considering expanding operations further.

• Philadelphia Fed business conditions July surges to 41.4 (above consensus 13.0) and vs June 10.3; prices paid index July steady at 53.9 vs June 53.2; new orders index July 37.0 vs June 27.3; the employment index July 10.0 vs June 7.9; six-month business conditions July 34.4 vs June 50.2
• June Retail Sales rose +0.2% vs. est. +0.3% and up +1% prior in May while core retails sales, ex autos, fell (-0.2%) vs est. (0.1%) and vs May +1.0%. Retail sales, excluding gas and autos: +0.4% vs. +0.3% consensus and +0.8% prior (revised from +0.5%).
• Business inventories for May rose +0.3%, in line with consensus and vs. prior +0.6%; Business sales rose +2.1%, prior +1.4% and inventory/sales ratio:1.28 months, prior 1.30.
• Pending home sales: -5.4% vs -0.5% est, prior +3.5%; -0.3% YoY. NAHB homebuilder sentiment: 34 vs 35 est, prior 36. Homebuilder sentiment stayed below 40 for a 15th straight month, the longest stretch since 2012, with 37% of builders cutting prices. The NAHB cited high mortgage rates and economic uncertainty, noting rates are likely to stay elevated amid the renewed US-Iran conflict.

• Managed Care: after a brief sell off in the sector yesterday following better results/guidance from ELV as investors took profits post a big run in the space, UNH posted a beat and raise this morning as managed care stocks rebound. UNH Q2 revenue $112.0B vs. est. $110.8B and adj EPS $6.38 vs. est. $4.85; Q2 Medical Care Ratio (MCR) 86.7% vs. est. 88.6% and down -270 bps y/y; raises FY26 adj EPS to $19.50-$20.00 from over $18.25 and vs consensus $18.48; Q2 Optum revs fell -2% y/y to $65.7B.
• Aerospace sector: ASTS shares fall as plans $1B convertible notes offering due 2034; GE topped Q2 expectations and raised its full-year outlook, but shares slipped as investors focused on margin pressure; raises FY26 adjusted EPS view to $7.65-$7.85 from $7.10-$7.40 and raises FY26 adjusted revenue view to up high-teens percent from up low double digits percent. ASTS initiated at Overweight and $100 PT at Piper and favorite name due to a more palatable valuation, and a clearer path to EBITDA upside and SPCX ($156 PT) and RKLB ($83 PT) initiated Neutral.
• Utility sector: AEP downgraded to Neutral from Buy at Goldman Sachs saying following recent positive catalysts, such as capital plan increases and data center load growth expectations, sending shares +28% over the last 12 months, the firm downgraded as most events are all priced in. NEE and Dominion (D) file to combine, building a stronger company to meet growing power demand across four of America’s fastest-growing States while keeping energy affordable and reliable.

• ATAI +33%; agreed to be acquired by LLY for an initial $2.8B, with Eli Lilly paying $6.75 a share in cash for AtaiBeckley, a 26% premium to Wednesday’s closing price of $5.36 and also includes contingent value rights (CVR) worth up to an additional $1B, or $2.50 a share.
• AVAV +3%; was upgraded to Outperform at Raymond James with a $210 price target noting the stock is down 55% since March as EBITDA estimates have reset materially lower, while believes consensus expectations for AeroVironment are now significantly de-risked.
• JBHT +4%; as Q2 results came in ahead of forecast largely on the back of higher-than-forecast Intermodal margin as volumes outpaced our forecast and as the company Hunt continued to execute on cost out and productivity; Q2 EPS $1.91 tops est. $1.73 and revs +19% y/y to $3.5B vs. est. $3.241B
• UNH +5%; after top and bottom line beat, raises FY26 adj EPS to $19.50-$20.00 from over $18.25 and vs consensus $18.48 and posts strong medical care ratio (MCR) beat at 86.7% vs. 88.4%, affected by $860M of net favorable prior period development, with the majority related to 2026 dates of service.
• VOYA +2%; after Semafor reported the retirement giant fields ongoing takeover interest; The outreach is informal, no talks are ongoing https://tinyurl.com/ur95adhr

• CNK -2%; along with weakness in IMAX as both were downgraded to Equal Weight from Overweight at Wells Fargo in reaction to the updated box office outlook and other factors. Wells now expects box office forecast $9.9B vs. the prior forecast of over $10B.
• IBM -2%; continues to decline post lower guidance, bringing 3 day loss to -32%.
• SNDK -5%; after memory stocks (MU, WDC, SKHY) shares surged in recent months, the group has seen a bout of profit taking after historic runs; MU -24% this month, SNDK -32%, WDC -23%
• TSM -2%; posted another record Q2 with revenue at the high end of guidance, ~$22B net profit, and gross margin hitting 67.7% (+150 bps QoQ), yet shares slide following higher capex plans as CapEx lifted to $60B–$64B (from $52B-$56B). 
• UAL -3%; shares fell as posted Q2 beat ($1.99/$17.7B vs. est. $1.88/$17.62B), but shares slipped as sees Q3 adj. EPS $2.50-$3.50 vs. est. $3.59, as assumed fuel $3.69/gal, profit sharing accrual $135Mm-$220Mm raises low end of FY26 adj. EPS to $9.00-$11.00 (vs. est. $10.47).