IBM −25%. Worst day since 1968. The AI trade just found its pretenders.

Nathan Reed

— 4 min read
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IBM −25%. Worst day since 1968. The AI trade just found its pretenders.

WEDNWSDAY MARKET UPDATE

PPI confirmed what CPI started — wholesale prices fell 0.3% in June, the first decline in a year. Two soft prints in two days. And gold gave it all back. It surged Tuesday, then faded to $4,062. The reason: $86 oil. The market isn't trading where inflation was. It's trading where it's going.

  • PPI fell 0.3% — first decline in a year; gasoline −12%; core +0.2% vs +0.3% expected; disinflation confirmed.
  • Gold faded to $4,062 — gave back Tuesday's CPI rally; $86 oil trumping backward-looking inflation data.
  • IBM crashed 25% — worst day since 1968; Q2 revenue missed by $700M; the AI trade has a casualty.

Gold & Macro

TWO SOFT PRINTS. GOLD STILL CAN'T HOLD A RALLY

Oil pipeline valve worker gloved hand

PPI fell 0.3% in June — the first monthly decline in nearly a year. Gasoline dropped 12%, accounting for two-thirds of the decline. Core PPI rose 0.2%, below the 0.3% expected. Two consecutive soft inflation prints in two days. CPI negative, PPI negative. And gold is at $4,062 — barely above where it was before the data dropped.

The problem is oil. Brent at $86. WTI at $80. The US reimposed a naval blockade on Iranian ports. Tehran closed Hormuz. The gasoline decline that drove both CPI and PPI is already reversing at the pump. June inflation is backward-looking. Oil is repricing the forward picture in real time. Warsh repeated it again today in the Senate: “no tolerance for persistently elevated inflation.” He's watching where prices are going, not where they were.

September hike odds are stuck at 49%. The market can't decide because the data and the oil are pointing in opposite directions. Gold is trapped between $4,000 support and $4,100 resistance until one of them breaks.

The Trade

IBM −25%. WORST DAY SINCE 1968

IBM vintage mainframe modern monitor

IBM fell 25% on Tuesday — its worst single day since 1968. Revenue of $17.2 billion missed estimates by $700 million. The AI trade just got its first major casualty. Not every company with “AI” in its pitch deck is actually benefiting from the cycle. IBM's consulting revenue is shrinking as clients build in-house AI capabilities instead of hiring outside help.

Meanwhile the banks are still celebrating. JPMorgan's $58 billion in revenue and Goldman's $20.98 EPS sent financials to 52-week highs. The split is widening: companies that directly monetize volatility — banks, energy, defense — are thriving. Companies that sell AI services into a cost-cutting environment are getting punished. Morgan Stanley reports Thursday. If it confirms the bank boom, financials become the sector to own in H2.

What to watch:

Today: Fed Beige Book. Tomorrow: Morgan Stanley earnings + jobless claims + Philly Fed. Friday: U. Michigan consumer sentiment + inflation expectations.

Heat Check

S&P 500 Heatmap — July 15, 2026. Credit: Finviz
S&P 500 Heatmap — July 15, 2026. Credit: Finviz

Nathan’s Take

“IBM fell 25% on an AI miss. JPMorgan posted $58 billion on war volatility. Two companies. Same economy. The market is sorting winners from pretenders in real time — and it's not being gentle about it”

Names to Know

IBM, BLACKROCK, SK HYNIX

IBM $IBM (▼ 25%) — worst day since 1968; Q2 revenue missed by $700M; consulting shrinking as clients build AI in-house; the AI pretender trap.

BlackRock $BLK (▲ Q2 beat) — AUM, revenue, and earnings all exceeded expectations; the world's largest asset manager is benefiting from the passive investing boom.

SK Hynix $SKHY (▲ 27% since IPO) — extended post-debut gains; now trading at $186; memory demand thesis validated by every data center company this quarter.

AMD $AMD (▲ 6%) — surged after Chinese companies received authorization to buy its AI chips; BofA raised target to $620.

Morgan Stanley $MS (reports tomorrow) — the last major bank to report; wealth management revenue is the metric to watch; closes out a historic bank earnings week.

For real-time data, I recommend monitoring Finviz.

The Macro Edge

  • US reimposed naval blockade on Iranian ports — oil holding above $80 WTI/$86 Brent; the June gasoline decline is already reversing.
  • September hike odds stuck at 49% — two soft inflation prints couldn't move the needle below 50%; oil is the anchor.
  • AMD authorized to sell AI chips to Chinese companies — ZTE, Kingsoft Cloud among buyers; the chip export thaw continues quietly.
  • Fed Beige Book due today — anecdotal reports from 12 districts; will show whether the ADP/payrolls slowdown is spreading or concentrated.
  • Tomorrow: Morgan Stanley earnings + jobless claims + Philly Fed. Friday: U. Michigan sentiment. FOMC July 29.

Morgan Stanley tomorrow. Beige Book today. Oil is running the show. See you in the morning.

Nathan Reed | Profits & Insights

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