Only 42% of the S&P 500 (SPX) finished higher yesterday, as Industrials (XLI) led the charge on strong earnings.

There was an odd reaction to the Iran conflict, with defense stocks plunging big time.

Themes

Defense was by far the best-performing theme, with all the individual categories enjoying strong moves higher. Nanotechnology also caught my eye, along with space technology and environmental sustainability names. Transports (TRAN) continue to impress.

Mag Seven

It was a brutal outing for “Mag Seven,” which is somewhat ironic, given that the current conventional wisdom is that the moment they cut back on spending is the moment the entire artificial intelligence (AI) industry collapses. 

Sudden swoons below the 50- and 200-day moving averages have become routine for “Mag Seven,” and I suspect bottom fishers are sniffing – there was already mounting interest before this week.

Rich Companies, Cheap Stocks

Valuations are beside the point right now when it comes to “Mag Seven.” More tangible evidence of a payout for their big bets is what ultimately triggers massive buying.

For now, the selling is overdone, but probably not done. These names will be screaming buys soon – maybe earlier next year; for now, their trillions will fuel other opportunities.

Not Budging on Drumbeat of War

The other wild card for the AI trade is resolving the Iran War. Crude oil is soaring, bond yields are spiking, and lots of folks on Wall Street are running around with their “hair on fire.”

Broad Market

Market breadth was decidedly bearish in every category, especially new highs to new lows.

After the Close

Remember the good old days when Intel (INTC) was inside everything, and the executives leaned back in their easy chairs and counted the money?

That was a long time ago. More recently, the company had one foot in the grave until the federal government gave it a bailout in the form of investment. Since then, the company has sprouted wings.

But the ride has gotten bumpier lately, and one major firm placed a “sell” rating on the stock. This is a bet on the new CEO and an administration that wants to see America win the AI race.

The lingering question is: can the company pull it off after stumbling so deep into the hole?

After the initial pop, the shares eased a bit as management discussed the plan going forward.

Kitchen Sink

In the 1940s, Shell Oil ran lots of ads urging on the troops and extolling their own efforts to win. One of their ads coined the phrase “throwing in everything but the kitchen sink.”

kitchen sink (n.)

Sink to wash food, dishes, etc., 1824. Phrase everything but (or and) the kitchen sink is attested from 1944, from World War II armed forces slang, in reference to intense bombardment.

Out for blood, our Navy throws everything but the kitchen sink at Jap vessels, warships and transports alike. [Shell fuel advertisement, Life magazine, Jan. 24, 1944]

        

Betting it All

On Wall Street, a “kitchen sink” quarter is one where all the bad news possible is issued at the same time. But Intel’s CFO made it clear that this is an old-fashioned version of the kitchen sink where the company will use every resource possible to fund its mission.

“We have over $30B of cash and a $10B revolver, so we’ve got $40B of liquidity.”

“We also have roughly $10B of non-core assets that can still be monetized, and we’ve seen customers willing to invest with us through prepayments that helped unlock capacity.”

“That said, if we’re super successful, we may need to tap the capital markets to drive more investment.”

Today’s Session

The market is paying more attention to the inflation debate and the situation in Iran; meanwhile, the street is abuzz over hyperscaler spend, which is really just investment.

All this against a backdrop of strong earnings, the strongest guidance ever, and an economy that is not too hot to hike rates.

A Friday rally that starts out with lower openings is a good buy signal.

Let’s watch and see how things flesh out.

Comments

Bond Yields and Inflation have peaked my Fear Index. We are spending $$$ so much money we don't have and the ways people can take on more risk is only growing. P. Krueger on 7/24/2026 11:09:03 AM

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