Push and pull in the market
Earnings are beating expectations on both the top line (revenue) and bottom line (profit), yet stocks are falling anyway. Taiwan Semiconductor, GE, and United Airlines all dropped after reporting. The likely reason: the good news was already priced into the shares. Companies have posted three or four straight quarters of double-digit earnings growth, some over 20%, so the stock moves already happened. What's left is profit taking.
Geopolitical risk adds pressure. Iran said it will hit back if the US goes after its infrastructure sites. President Trump said the US could start targeting those sites as early as next week. Crude oil has rallied hard this month. West Texas Intermediate sits near $80 a barrel, and Brent keeps rising.
Tech and rates
Memory chip makers are getting hit hardest. Intel, AMD, and Nvidia are weaker. Part of this traces to South Korea, where the government is putting limits on leveraged ETFs and raising the margin (borrowing) rates needed to trade these stocks, trying to cool off the enthusiasm in equities. That drove big drops in SK Hynix, Samsung, and other overseas names, and the weakness is leaking into US markets.
For tech to recover, the market needs the bond market to settle down. The 10-year Treasury yield sits just below 4.6%, and the 30-year yield is climbing, even after inflation data came in better than expected. The open question: does inflation stay sticky, or is this a blip? If crude oil stabilizes around $80, that pushes inflation up and could keep it above the Federal Reserve's 2% target. Stable or falling yields would give tech firmer footing. The day before, the big old tech names (Apple, Microsoft, Meta, Alphabet) gained while memory chip and semi-equipment makers fell. That split continues.
Taiwan Semiconductor
TSMC announced an extra $100 billion investment in its Arizona fabrication plants for two-nanometer chips, bringing its total US commitment to about $265 billion. This is less about beating Intel and more about ramping up capacity, since demand still outstrips supply. The administration is likely pleased.
The results were strong: beat on revenue, beat on earnings per share, and guided higher. Gross margin (the profit left after making the product) hit 67.7% this quarter, but the company guided for that to stay flat next quarter, which may be pressuring the stock. Revenue for Q3 is expected between $44.6 billion and $45.8 billion, about 12% sequential growth. Operating margins keep expanding, with profit margins near 56%. The high-end AI chip business is doing well.
The real worry sits in the back of investors' minds: how long will tech companies keep paying the rising costs? These customers say they'll keep ramping capital spending through 2027, but investors want to know when that spending peaks. The results are hard to argue with, though gross margin guidance came in a touch light.
United Health
The stock had crashed from around $630 a share to under $300 on earlier missteps. Now it's recovering. The company beat on the top and bottom lines and raised its full-year profit outlook, managing high medical costs and using AI to streamline work. It's investing about $1.5 billion in AI, which will likely cut some jobs.
The largest private health insurer expects 2026 earnings between $19.50 and $20 per share, up from a prior outlook of about $16.25. Full-year revenue guidance is $439 billion. Operating expenses are under control. The company is dropping some unprofitable contracts, which should help margins. Fixing the problems that caused pain in late 2025 is exactly what investors wanted, and the beat and raised guidance are giving the Dow a lift today.
GE Aerospace
Services and spare parts divisions outperformed again, with growth over 20% in most segments, including engine sales. The stock pulled back and hit post-market lows before stabilizing, likely profit taking after a parabolic run over the past couple of years.
The backlog (orders waiting to be filled) keeps growing. The company raised its fiscal 2026 adjusted EPS view to $7.65-$7.85, up from about $7.10-$7.40. CEO Larry Culp said revenue and EPS both rose more than 20%, driven by a robust commercial services segment. Backlog growth has run around 40% on the services side, and backlog on sales was 86% last quarter. One possible concern: the company mentioned raising its capital spending numbers, which could weigh on results. As with the other names, much of the good news may already be built into the stock.
United Airlines
Strength continues, mirroring Delta. The company caters more to premium, higher-end travelers. The biggest issue is fuel. Higher fuel prices could add nearly $6 billion to expenses this year, far above what was planned, driven by the Middle East conflict and rising oil. Second-quarter fuel cost rose 84% from a year ago to about $2.3 billion, and the company raised its fuel-spend guidance.
Capacity rose about 3.5% in the quarter, mostly seasonal summer travel. Rising capacity is normally a red flag, but CEO Scott Kirby said they won't increase capacity further. Jet fuel is pushing airfares up 15% to 20% from a year ago. United is eating some of that cost but won't lower fares, and may keep raising them since jet fuel has reversed higher over the past month or two. Delta said the same. Airlines like United, American, Delta, and Southwest are so dependent on fuel prices that costs hit margins immediately. Guidance was decent but a little light for the current quarter, which explains the pullback, though the stock is stabilizing. Watch crude oil to watch the airlines; they move together.
