Dow Futures Climb, Nasdaq Futures Fall 0.7% as TSMC Earnings Trigger Chip Stock Selloff

On 16 July 2026, U.S. stock futures pointed in different directions before the opening bell. Dow futures edged higher, while Nasdaq futures dropped about 0.7% after investors reacted to Taiwan Semiconductor Manufacturing Co.’s (TSMC) latest earnings. 

Although the chipmaker posted strong results and maintained a positive outlook for AI demand, semiconductor shares still came under pressure as traders locked in recent gains. Investors are now weighing whether this is simply a pause after a strong rally or the start of a wider pullback in technology stocks.

Dow futures rise while Nasdaq futures slide

Key market moves before the opening bell

U.S. stock futures moved in opposite directions on 16 July 2026. Dow futures gained after stronger-than-expected healthcare earnings lifted sentiment. Nasdaq 100 futures fell around 0.7%, while S&P 500 futures also traded lower as chip stocks led the decline.

UnitedHealth supported the Dow after reporting quarterly earnings above expectations and raising its full-year profit forecast. At the same time, losses across semiconductor stocks weighed on the technology sector. Investors also became more cautious after two sessions of gains that followed softer U.S. inflation data. With more earnings reports and fresh economic data due later in the day, many traders chose to take profits.

Why strong TSMC earnings failed to lift semiconductor stocks?

Why did investors sell despite strong TSMC earnings?

Taiwan Semiconductor Manufacturing Co. (TSMC) reported another strong quarter. Second-quarter profit climbed 77% from a year earlier to a record T$706.6 billion ($22 billion). Demand for AI chips remained healthy, and management kept a positive outlook for advanced semiconductor production.

$TSM – TSMC'S BLOWOUT ISN'T ENOUGH: PROFIT +77%, ANOTHER $100B FOR ARIZONA, AND THE ADR STILL DROPS ~4%

TSMC's Q2 net profit jumped 77.4% year-on-year, and it guided Q3 revenue to $44.6B–$45.8B at a 56–58% operating margin, lifted its 2026 capex plan to $60–64B (from $52–56B),… pic.twitter.com/wyNz3LKj6Y

— Enkhmanal 🟠 (@Enkhmanal) July 16, 2026

Even so, TSMC’s U.S.-listed shares slipped in premarket trading. After months of strong gains in AI-related stocks, many investors used the earnings release as an opportunity to secure profits instead of increasing their positions.

Are AI chip valuations becoming too expensive?

The recent pullback suggests investors are becoming more selective. Semiconductor stocks have risen sharply during the AI boom, pushing valuations to elevated levels. That made TSMC’s earnings report a natural point for traders to reduce exposure rather than buy more shares.

Memory chip companies, including Western Digital and Seagate, also traded lower before the market opened.

According to the latest Meyka AI stock analysis tool, TSMC’s long-term outlook remains positive because demand for AI infrastructure continues to support revenue growth. In the short term, technical indicators suggest higher volatility following the recent rally. Other analysts share a similar view, saying investors are paying closer attention to company guidance than headline earnings numbers.

TSMC stock snapshot (Meyka)

• Short forecast: Long-term outlook remains bullish as AI chip demand stays strong.
• Technical analysis summary: The long-term uptrend remains intact, although short-term momentum has weakened after recent profit-taking.
• What Meyka says: Focus on demand trends and forward guidance instead of reacting to short-term price moves.

What investors are watching beyond the chip selloff?

Which economic reports could move the market next?

Investors are waiting for the latest U.S. economic data. The June retail sales report and weekly jobless claims are scheduled for release later on 16 July. Both reports will offer a clearer picture of consumer spending and labour market conditions.

Following softer inflation data earlier in the week, markets largely expect the Federal Reserve to keep interest rates unchanged at its next meeting. Strong economic figures could improve market sentiment, while weaker data may increase expectations that policymakers will cut rates later this year.

Why does earnings season remain the biggest market driver?

Company earnings continue to drive market sentiment. Netflix is due to report quarterly results after the closing bell, with several technology and industrial companies scheduled to follow over the next few days.

Investors want evidence that AI spending is still translating into stronger revenue and profits. Solid guidance could help technology stocks recover after recent selling. More cautious forecasts, on the other hand, could keep pressure on the Nasdaq and semiconductor sector. Many analysts expect forward guidance to carry more weight than earnings beats as reporting season continues.

Conclusion

Dow futures held firm, while Nasdaq futures reflected growing caution across semiconductor stocks despite TSMC’s record earnings. Investors are looking beyond strong quarterly results and paying closer attention to company guidance and economic data. 

With retail sales, jobless claims, and more earnings reports due, market sentiment could shift quickly. For now, both AI demand and the broader economic picture remain the main factors likely to influence the next move in technology stocks.

Disclaimer:

The content shared by Meyka AI PTY LTD is for research and informational purposes only. Meyka is not a financial advisory service, and the information provided should not be treated as investment or trading advice.