We’re coming off a busy week in markets dominated by the resurgence of war in the Middle East and a sharp sell-off in the seemingly invincible semiconductor trade.
This week, investors step into another packed five-day stretch headlined by earnings from Mag Seven stalwarts Alphabet (GOOG) and Tesla (TSLA) on Wednesday.
The S&P 500 (^GSPC) closed out Friday down 1% for a loss of 1.5% on the week. The Dow (^DJI) lost 0.8% on Friday to close the week on a loss of 0.9%. The Nasdaq (^IXIC) saw the largest losses, down 1.4% on Friday and 2.9% on the week.
Besides the Mag Seven heavy hitters, we’ll also be watching Thursday’s report from Intel (INTC) — a check-in on the chip trade — and reports from GE Vernova (GEV) and Honeywell (HON) that should give investors a read on the industrial and power-demand side of the business.
Also critical for investors will be Wednesday’s report from longtime tech major IBM (IBM), coming after a major sell-off following a dour letter from CEO Arvind Krishna.
Elsewhere, reports from AT&T (T), T-Mobile (TMUS), and Verizon (VZ) will provide investors with a check on the state of the telecom business, likely to be especially interesting after SpaceX’s (SPCX) entrance into the market.
The packed earnings slate is balanced out by a relatively tame economic data calendar, where a sweep of index readings from S&P Global will help investors assess the state of the economy on a broad basis.
Big Tech needs to deliver ‘measurable returns’
The global chip stock rout has erased more than $3 trillion in market value since June 22, much of which has flowed into the Magnificent Seven.
This week, that rotation will get a major test on both sides, with earnings reports from the buyer-side Magnificent Seven names Alphabet (GOOG) and Tesla (TSLA), and from seller-side leader Intel Corporation (INTC).
“Investors will be watching closely to see whether earnings can justify elevated valuations and whether the recent pullback develops into a broader correction or simply a pause in the AI-led rally,” Capital.com analyst Daniela Hathorn said.
Semiconductor sales increased 79% year on year in the first quarter of 2026, up from to 38% in the fourth quarter of 2025. BNP Paribas expects the second quarter to show sales growth of 132%.
For Big Tech, data center capex from the top five hyperscalers — Microsoft (MSFT), Alphabet, Amazon (AMZN), Meta (META), and Oracle (ORCL) — is expected to grow 79% year on year in 2026 to $644 billion, and 18% year on year in 2027 to $759 billion, BNP analysts said.
But the biggest question to be answered, says LPL Financial chief equity strategist Jeff Buchbinder, is whether all that spending is good for legitimate return on investment. No longer is it enough to spend — investors want to see results.
“AI is entering a new phase. The market is moving from pricing in promise to pricing in execution,” Buchbinder wrote in a note. The recent semiconductor pullback, Buchbinder said, should tell investors this transition is already underway.
“Investors should focus less on who is spending the most and more on who is generating measurable returns from those investments,” Buchbinder said.
Google CEO Sundar Pichai speaks during the 2026 Google I/O technology developer conference in Mountain View, California, on May 19, 2026. (Photo by Karl Mondon / AFP via Getty Images) ·KARL MONDON via Getty Images
The Hormuz oil tap is turning back off
In the roughly monthlong window when the US and Iran’s preliminary agreement to end the war seemed to hold, oil shipped through the Strait of Hormuz began to quickly recover.
Yet over the past week, that progress has sharply reversed, according to Goldman Sachs, as the memorandum of understanding fell apart and the ceasefire gave way to days of fighting between the US and Iranian militaries.
“Markets had initially expected flows to normalize following the US-Iran memorandum of understanding signed on 17 June,” said Lu Ming Pang, vice president of gas & LNG research at Rystad Energy. “However, those expectations have failed to materialize, and the latest escalation has further reduced the likelihood of a near-term recovery.”
After falling to near zero in the early days of the war, flows through the strait had recovered to roughly 10 million barrels per day in early July. As of July 15, those levels had fallen back near 3 million to 5 million barrels per day, with further losses ahead, per Goldman Sachs strategists led by Daan Struyven. The setback now leaves the oil market short 13.4 million barrels per day of oil from the Gulf, the strategists said.
That’s driven oil prices back into a sharp hike upward. As of Friday afternoon, futures on Brent crude (BZ=F) had gained roughly 15% through the week, pushing the international benchmark contract back above $87.50 a barrel. Those on US benchmark WTI crude picked up roughly 14% to trade above $81.
“As confidence in the security of the Strait continues to erode, markets will increasingly need to price in the prospect of more prolonged supply disruptions,” Pang added.
Ships and tankers in the Strait of Hormuz off the coast of Musandam, Oman, April 18, 2026. REUTERS/Stringer//File Photo ·Reuters / REUTERS
The greenback gets a bid
The US dollar (DX-Y.NYB) has had a strong start to the year, thanks to booming foreign demand for US tech stocks and a more hawkish Fed.
But even with it up roughly 2.5% against a basket of other major currencies, Bank of America believes it has more room to run in the second half of 2026.
The bank’s FX desk sees three primary drivers for dollar outperformance: conflict in the Middle East, the AI boom, and a higher-for-longer interest rate outlook.
First, the war in Iran and the closure of the Strait of Hormuz are set to keep geopolitical tensions high and oil prices — which are priced in dollars — higher.
Second, the dollar is set to benefit from a boom in foreign demand for US equities, as investors outside of the US have rushed for access and exposure to the country’s tech sector, the analysts wrote.
The final piece of the puzzle, the team said, is BofA’s “well out-of-consensus call” on interest rates. Bank of America forecasts the Federal Reserve will hike interest rates by 25 basis points three times in 2026, whereas the market is only pricing in one hike. If rates do end up 75 basis points higher, they argued, that’s likely to be good for the dollar.
A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in New York City, New York, U.S., July 19, 2021. REUTERS/Andrew Kelly/File Photo ·Reuters / REUTERS
Economic data: ADP weekly employment change, week ended July 4 (+19,750 previously); Philadelphia Fed non-manufacturing activity, July (-25.8 previously)
Earnings calendar: Novartis AG (NVS), Charles Schwab (SCHW), Danaher Corporation (DHR), Chubb (CB), Capital One Financial Corporation (COF), 3M Company (MMM), Northrop Grumman (NOC), General Motors (GM), MSCI (MSCI), Interactive Brokers Group (IBKR), EQT Corporation (EQT), Halliburton Company (HAL), KeyCorp (KEY), Equifax (EFX), Ally Financial (ALLY), Hasbro (HAS)
Wednesday
Economic data: MBA mortgage applications, week ended July 17 (-2.7% previously)
Earnings calendar: Alphabet (GOOG), Tesla (TSLA), Philip Morris (PM), GE Vernova (GEV), Texas Instruments (TXN), IBM (IBM), AT&T (T), ServiceNow (NOW), CSX Corporation (CSX), Moody’s Corporation (MCO), Equinor ASA (EQNR), CME Group (CME), Kinder Morgan (KMI), United Rentals, (URI) TE Connectivity (TEL), Westinghouse Air Brake Technologies Corporation (WAB), Waste Connections (WCN), Northern Trust (NTRS)
Thursday
Economic data: Initial jobless claims, week ended July 18 (212,000 expected, 208,000 previously); Continuing claims, week ended July 11 (1.808 million expected, 1.805 million previously); Chicago Fed national activity index, June (-0.1 previously); Kansas City Fed manufacturing activity, July (13 expected, 11 previously)
Earnings calendar: Intel Corporation (INTC), Nestlé S.A. (NESN.SW), RTX Corporation (RTX), T-Mobile US (TMUS), Thermo Fisher Scientific (TMO), SAP SE (SAP), TotalEnergies SE (TTE), Union Pacific Corporation (UNP), Blackstone (BX), Lockheed Martin (LMT), Comcast (CMCSA), Freeport-McMoran (FCX), Norfolk Southern (NSC), Honeywell International (HON), Digital Realty Trust (DLR), Comfort Systems USA (FIX), PG&E Corporation (PCG), Teck Resources (TECK)
Friday
Economic data: S&P Global US manufacturing PMI, July preliminary reading (54.5 expected, 53.9 previously); S&P Global US services PMI, July preliminary reading (51.5 expected, 51.2 previously); S&P Global US composite PMI, July preliminary reading (51.6 expected, 51.9 previously); New home sales, month-on-month, June (+4% expected, -7.3% previously); Kansas City Fed services activity, July (5 previously)
Earnings calendar: American Express (AXP), NextEra Energy (NEE), Verizon Communications (VZ), HCA Healthcare (HCA), SLB N.V. (SLB), Charter Communications (CHTR), Tenet Healthcare Corporation (THC), Booz Allen Hamilton (BAH), Lamb Weston Holdings (LW), Gentex Corporation (GNTX), Liberty Global (LBTYA)
