US Stock Market Trend (July 17): TSMC Good News Fully Priced In Drags Down Chips, Semiconductor Index Falls Into Technical Bear Market
TechFlow Selected TechFlow Selected
US Stock Market Trend (July 17): TSMC Good News Fully Priced In Drags Down Chips, Semiconductor Index Falls Into Technical Bear Market
"Excellent" is no longer a bonus; only "exceeding everyone's expectations" deserves to continue rising.
Navigating Web3 tides with focused insightsBy: TechFlow Research
TSMC released its Q2 earnings far exceeding expectations, with net profit surging 77.4% year-over-year. It also raised full-year revenue and capital expenditure guidance, but the stock price fell instead, with "buy the rumor, sell the news" playing out once again. The Philadelphia Semiconductor Index fell 4.29% in a single day, correcting over 22% from its mid-June high, officially entering a technical bear market. The Nasdaq 100 fell 2% at one point during the session. Google fell over 4% on news of delays to its Gemini flagship model, while Chinese concept stocks rose against the trend, with the Golden Dragon Index up 1.79%. Gold broke below the $4,000 mark.
Market Performance
The S&P 500 fell 0.51% to 7,533.77 points. The Dow Jones fell 0.20% to 52,552.97 points. The Nasdaq Composite fell 1.47% to 25,881.946 points. The Nasdaq 100 fell 1.62% to 29,025.77 points, falling 2% at one point during the session. The Russell 2000 fell 0.06% to 2,974.567 points. The VIX rose 6.64% to 16.71.
The Magnificent Seven Index fell 1.31%. Apple rose 1.76%, Microsoft rose 1.38%, Tesla fell 0.86%, Amazon fell 1.99%, Nvidia fell 2.40%, Meta fell 2.46%, and Google Class A fell 4.44%, falling 5% at one point during the session due to rumors of a delay in the Gemini flagship model launch.
The Philadelphia Semiconductor Index fell 4.29% to 11,867.50 points, correcting over 22% from its mid-June high, officially entering a technical bear market. Marvell and Credo fell over 8% leading the decline, SanDisk plunged over 12%, TSMC ADR fell 2.25%, and AMD fell 5.33%. The Semiconductor ETF fell 3.70%, the Technology Sector ETF fell 2.24%, the Regional Bank ETF rose 2.82%, and Consumer Staples and Banking ETFs both rose over 2.44%.
SpaceX fell over 3%, breaking below the issue price again, and plunged over 4% after hours following the cancellation of the Starship test flight. Netflix fell 9% at one point after hours, with Q3 guidance below expectations.
The Nasdaq Golden Dragon China Index rose 1.79% to 6,396.75 points. Xiaomi rose 5.4%, BYD rose 3.3%, Meituan rose 3.2%, Alibaba fell 0.1%, and Tencent fell 0.4%.
WTI crude fell 0.82% to $78.95/barrel. Brent crude fell 0.85% to $84.23/barrel. Spot gold fell 2.08% to $3,975.93/ounce, breaking below the $4,000 mark. Spot silver fell 3.97% to $55.5054/ounce. Bitcoin retreated to near $64,200. The 10-year US Treasury yield rose 1.81 basis points to 4.5654%. The US Dollar Index rose 0.31% to near 100.76.
Macro and Outlook
TSMC's earnings data itself had no shortcomings; net profit surged and capital expenditure was raised, theoretically proving that AI hardware demand remains strong, but the market did not interpret it this way.
The gross margin of 67.7% only slightly exceeded the upper limit of the guidance, and the full-year revenue guidance increase could only be considered "slightly better than expected." This "just met standards" report card offered no surprises and hardly elicited a positive reaction at current valuation levels. Institutional views were more optimistic, believing that short-term gross margin fluctuations were one-off factors, and AI demand is penetrating from pure chips to CPUs and HBM, with the long-term logic remaining unbroken.
Goldman Sachs characterized this sell-off as systemic pressure across the entire AI sector, with optical interconnects, AI semiconductors, and data centers all falling between 5% and 12% over the last two trading days. JPMorgan tracking of hedge fund positions found that over the past month, these funds have been continuously reducing AI exposure and leveraged ETF positions, and the peak of forced liquidation may be mostly over. There is also a view that the current decline has entered a range historically prone to rebound, but whether it can stop depends on whether cloud computing giants are willing to continue raising AI capital expenditure guidance.
Regulatory actions from South Korea added fuel to the fire. Local regulators suddenly tightened rules for single-stock leveraged ETFs, significantly raising margin thresholds, leading to immediate stampede-like profit-taking in the memory chip sector, with the semiconductor industry index falling 9% at one point during the session. On the same day, the Bank of Korea raised interest rates to 2.75% for the first time in three and a half years, and the KOSPI Index closed down nearly 7 percentage points that day, triggering trading circuit breakers for the eighth time this year.
US economic data released that day did not form a unified direction. Jobless claims fell to 208,000, the lowest since early May. Retail sales month-over-month rose only 0.2%, mainly dragged down by gas station sales due to oil prices; excluding this, core retail sales month-over-month rose 0.7%. The Philadelphia Fed Manufacturing Index jumped to 41.4, while the market originally expected around 12.5; this reading is higher than any month since the end of 2021. Real estate dragged things down, with builder confidence and pending home sales data both missing expectations. The market currently believes the probability of a rate hike in July is only around 10%, with September probability at about 48%, basically a fifty-fifty split.
On the geopolitical front, US airstrikes on Iran continued for the fifth consecutive night. Ship passages through the Strait of Hormuz fell to about 10% of pre-conflict levels, with only 13 merchant ships passing through on the 16th. Trump expressed appreciation for Iran releasing prisoners that day, which the market interpreted as both sides leaving room for negotiation. Oil prices failed to continue surging on the airstrike news, with WTI night trading touching near $81 before turning downward.
Gold and Bitcoin both came under pressure that day, backed by the US dollar strengthening again. The US dollar had been unable to lift its head in recent days due to soft CPI and PPI inflation data, but that day's resilient retail and employment data, combined with safe-haven buying driven by geopolitical tensions, lifted the US Dollar Index together.
TechFlow Perspective
TSMC's earnings reveal a phenomenon worth alerting. Even with net profit growth of 77% and raised capital expenditure, the market chose to sell, indicating that the valuation threshold for AI hardware stocks has been raised high enough. "Excellent" is no longer a bonus; only "exceeding everyone's expectations" deserves continued rise. Once this pricing logic forms, subsequent earnings reports that even slightly miss expectations could trigger similar sell-offs.
The causes of this round of sell-off are complex, involving both a re-examination of the sustainability of AI capital expenditure and pure position issues. The tightening of Korean leveraged ETF regulations and hedge fund reduction formed a resonance. What truly needs judgment is whether JPMorgan's mention of "de-leveraging nearing an end" is true. If there is no new forced liquidation pressure in the next week or two, the sell-off will naturally stabilize; if cloud computing vendors continue to raise capital expenditure guidance in the next round of earnings, market sentiment also has a chance to repair.
Gold breaking below $4,000 and Bitcoin retreating simultaneously release a signal: safe-haven assets are also under pressure when the US dollar strengthens. This indicates that this adjustment has not evolved into a comprehensive safe-haven move; funds are just withdrawing from high-valuation AI hardware stocks, not withdrawing from risk assets themselves. The counter-trend rise of Chinese concept stocks also confirms this, with funds seeking targets not overdrawn by the AI narrative. The next key node is the earnings of hyperscale cloud vendors. Whether they can verify the sustainability of capital expenditure will determine whether this chip stock correction is a short-term clearance or the beginning of a trend reversal.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
@chaoxiangooo
