Chip stocks tumble even on a record TSMC quarter

Good morning. Chips ran the show on Wall Street yesterday. TSMC, the world's biggest contract chipmaker, reported a record quarter, and semiconductor stocks sold off anyway, dragging the Nasdaq sharply lower. Investors seemed to decide the good news was already in the price. In Seoul, SK Hynix and Samsung fell so hard that the exchange briefly halted trading.

The mood is that the rally may have run too far. One analysis says the sector is on the edge of a bear market, which means a drop of more than 20% from the peak. Others call it a healthy rotation, with money moving out of AI hardware and into banks, health care and small caps. UnitedHealth's strong results made health care a refuge, and the banks keep reporting blowout quarters.

Rate talk is leaning toward hikes, not cuts. Dallas Fed President Lorie Logan said that even with cooler prices, inflation is not yet back to 2% and rates should rise modestly. Weekly jobless claims fell to 208,000, a reminder that hiring is still solid. Housing is the soft spot: pending home sales dropped 5.4% in June and mortgage rates are at their highest this year.

The Middle East is still a wild card. After President Trump hinted at strikes on Iranian infrastructure next week, Tehran warned of retaliation if Hormuz is touched, and oil, already above $80, is eyeing $90.