by Michael P. Reinking, CFA - Sr. Market Strategist

Published on 7/21/26 (a/o 12:45 pm)

It was a busy twenty-four hours of tech headlines which largely reinforced the pre-existing themes ahead of an important evening of earnings (GOOGL/IBM/NOW/TSLA/TXN).After the close SMCI pre-announced, highlighting strong margins and a massive jump in orders (>$60B) taking the stock sharply higher and pulling peers up with it.  This morning WSJ reporting that Anthropic will purchase up to 2GW of  AMD Instinct MI450 chips starting in second half of ’27.  While AMD will invest $5B in the company and will provide a financial backstop for Anthropic data center leases. OpenAI also announced its plan to build a new data center in Georgia and according to the WSJ increased its projected spending to $750B through 2030 up from $600B earlier this year.

GE Vernova one of the big beneficiaries of the AI infrastructure spending also reported this morning. It looks like an EPS miss but somewhat unclear whether the numbers comp to consensus. The company highlighted very strong demand with power orders up 135% y/y and electrification up 93% though wind fell 39%. Guidance was increased for revenues ($45.5-46.5B prior $44.5-45.5B) and cash flow ($11.5-12.5B prior $6.5-7.5B). On the call CEO Scott Strazik said, "The long cycle electric power industry is in the early stages of a multi-decade growth opportunity and we are well-positioned to create substantial value. Electric demand is accelerating, driven by economic growth, grid modernization, electrification, data center expansion and the need for more reliable, resilient power.” Sticking with this theme for a moment Utilities are the best performing sectors with IPPs leading to the upside. The nuclear stocks are also moving higher as the administration is pushing forward with efforts to speed up the development of new power plants.

Last night Pegasystems was the most recent software company to miss estimates calling out AI - “unprecedented changes in the AI market caused clients to delay their purchasing decisions,” echoing what we heard from IBM last week. The sector is lower across the board with the IGV down ~2.5%, this shines the spotlight a little more brightly on Service Now this evening. OpenAI was also in the headlines after it said two of its AI models escaped a test environment and hacked Hugging Face, an opensource AI platform, raising new security concerns. This did help cybersecurity stocks early on, but they ultimately came under pressure. 

Commodities in general are moving higher which is helping both the energy and materials sectors. Industrials are moving to the upside. Wabtec is an earnings standout trading up >10% after a beat and raise quarter taking ’26 estimates up by 0.30 at the midpoint to $10.60 - $10.90. OTIS is under some pressure after its results - Q2 EPS was in line with revenue beat but margin miss. The company  cut full-year EPS to $4.01 - $4.05 from $4.20 - $4.24, highlighting weakness in Asia Pacific region.

Financials are holing on to modest gains. It continues to be busy within the sector overall the results look pretty solid, but the response has been mixed with COF/CB/MCO all trading lower. The exchanges are moving higher after CME results.

Consumer discretionary is the worst performing sector. Apparel stocks are under pressure while the mega-caps also move modestly lower. Autos are outperforming with GM building on yesterday’s earnings momentum. PulteGroup is helping the homebuilders after solid results. Management said, “overall, market conditions remain highly competitive as macroeconomic uncertainty, volatile interest rates and strained affordability weigh on housing demand, but there are early signs that conditions may be stabilizing in select geographies around the country”.  

Communication services are also lower. Withing the sector the telecom stocks are trading well after a strong report by AT&T with net adds in wireless and fiber ahead of estimates. The company reiterated FY guidance and announced accelerated share repurchases in 2026. Ahead of Alphabet earnings, META is doing most of the damage after a cautious sell-side earnings preview. Healthcare is also slightly lower. Last night, President Trump announced tariffs on imported generic drugs would jump from 0% to 100% in two years and 200% in year three in hopes on reshoring manufacturing.

Speaking of tariffs Bloomberg confirmed yesterday’s FT tariff story. USTR Greer testified before the Senate today along with trade policy he also discussed the build out of critical minerals infrastructure to get away from China independence, helping the rare earth stocks. After meeting with Secretary of State Rubio China’s Foreign Minister called the meeting constructive.  

The economic calendar remains sparse. Mortgage apps ticked up slightly on a w/w basis. Treasury yields are up 1-3bps across the curve with the front end hitting new YTD highs. The USD index is hovering ~$101.

It was a mixed overnight session. Tech heavy indices in Asia rallied at the open but faded throughout the session to end mixed. In Japan trade data showed strong increases in both imports and exports. The Yen hit fresh lows crossing over 163¥/$ but briefly rallied following a Bloomberg report that said BOJ insiders are open to raising rates faster pace than consensus expectations. The central bank is widely expected to leave rates unchanged next week with an additional hike expected in December. Speaking of central banks Indonesia’s central bank surprised markets by leaving rates unchanged overnight. After opening slightly lower European indices closed modestly higher. In the UK June inflation data showed some moderation coming in a touch better than expected. Ahead of tomorrow's ECB rate decision, yields across the region are moving modestly higher with some flattening of the curve. 

Oil prices are up >3% with ICE Brent briefly trading back over $95. Natural gas prices are moving higher in both the US and Europe. Precious metals are extending this week’s move higher breaking some of the recent correlation with oil/yields. Gold and silver are both breaking above their 20d ma for the first time in a couple of months. Copper is pulling back modestly. Ag is moving higher. Crypto pulled back modestly after yesterday’s gains as there was some Democratic pushback related to the ethics provisions. According to CNBC the new bill would ban federal officials from issuing or sponsoring digital assets. The updated bill was released around 1:00 only 616 pages to go through. Senator Thune suggested a vote could take place next week.  

Earnings will continue to dominate the conversation with the key reports after tonight’s close. Tomorrow the ECB has its rate decision and claims data will get some attention.

 Earnings:

After-Market: AVB, CCI, CSX, EQR, FAF, FULT, GGG, GL, GOOGL, GTY, IBM, KALU, KNX, LBRT, LUV, MEDP, NOW, OII, PKG, RJF, RNR, RS, SANM, SLG, SON, TCBI, TSLA, TXN, WEX, WH

Pre-Market: AAL, ACI, ALLE, AMP, BFH, BX, CLF, CMCSA, COCO, DGX, DOV, DOW, FCX, HBAN, HOG, HON, LAZ, LMT, NDAQ, NSC, ORI, PCG, POOL, R, ROP, RTX, SNA, TMO, TMUS, TSCO, UNP, VC, VLY, WST

After-Market: ABCB, APPF, ASB, BYD, DLR, INTC, KN, LAZ, MOH, MXL, NEM, OVV, REXR, RNG, SAM, SAP, SCHL, SLM, URI, VRSN

US:

Global: