Stock market futures opened mixed on the week of July 20-24, 2026, as investors brace for a volatile period shaped by major tech earnings and persistent concerns over artificial intelligence spending. The stock market is being tested this week by weakness in semiconductor shares and anxiety about whether massive AI infrastructure investments can justify their premium valuations.
Semiconductor stocks bore the brunt of investor concern this week, with the iShares Semiconductor ETF (SOXX) pulling back more than 10% week to date, while the VanEck Semiconductor ETF (SMH) slid nearly 9%, according to CNBC. Anxieties around artificial intelligence spending came to the fore as traders reassess the pace and sustainability of AI-driven capital expenditures by major technology companies.
The macroeconomic picture has also darkened. Oil prices spiked back above $80 a barrel as the resumption of hostilities between the U.S. and Iran raised questions about the inflation path, even after encouraging consumer price data arrived earlier in the week. The Federal Reserve’s scaled-back communication has left investors flying blind on interest rate policy, with rate hikes remaining on the table.
Despite the headwinds, stocks are holding up fairly well, according to market strategists. “The fact that we’re not reacting, is good news,” said Mark Hackett, chief market strategist at Nationwide’s Investment Management Group, noting that most recent news aside from inflation data has been potentially problematic. On an equal-weight basis, the S&P 500 is beating the market-cap-weighted index this year, and small caps continue to outperform, with the iShares Russell 2000 ETF up 19% year to date.
Earnings season is off to a strong start, with major banks crushing expectations, a sign of robust capital markets. S&P 500 companies are expected to show quarterly earnings growth greater than 20%, a velocity more typical of recession recoveries, according to CNBC. This strength in fundamentals is underpinning investor confidence that stocks will continue climbing in the second half of 2026, though perhaps not at the same pace as the first half.
Next week’s earnings will be pivotal. Alphabet will be the first of the hyperscalers to report results, and investors will be watching closely for its capital expenditure guidance for next year. According to Evercore’s Internet research head Mark Mahaney, Alphabet is expected to post an acceleration in cloud growth and announce it will raise capital expenditures for 2027, both crucial for the broader AI trade. Alphabet also faces questions about why it reportedly delayed the rollout of its flagship AI model. Tesla will also report next week, though attention has shifted somewhat to SpaceX, another of Elon Musk’s companies. “People are looking for positive AI data points,” Mahaney said. “I think they’re going to get them.”
The semiconductor sector remains a key uncertainty. Even after this week’s slide, the SOXX ETF is still up more than 70% year to date, and Micron Technology remains up about 200% year to date. Traders are trying to gauge whether the air is coming out of a trade where retail investors have used leverage to double down on bets. “I keep calling it the great reconciliation of wondering, what’s going to win at the end of the day?” said Mark Malek, chief investment officer at Siebert Financial, referring to the tension between deteriorating macro conditions and the potential for stocks to overcome them.
Sources
- CNBC — Stock market outlook for July 20-24, 2026, semiconductor weakness, earnings guidance, and analyst commentary on the AI trade
- Gotrade — Weekly outlook noting Alphabet and Tesla earnings as the week’s biggest catalyst with AI sentiment turning fragile
- Reuters — Wall Street week ahead coverage of Alphabet and Intel results as focal points for the AI trade amid semiconductor pullback
- The New York Times — Coverage of stock declines driven by anxiety about tech and AI spending
- Yahoo Finance Singapore — Reporting on chipmakers facing sell-off amid AI spending anxiety and geopolitical risks
