DR Horton Showcases Homebuilder Pain: 8 Key Items Shaping the Stock Market Tuesday

These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to a positive start to the trading day.

1. The US and Iran exchanged strikes for a 10th consecutive day even as mediators sought to revive a truce, while the Houthi militant group in Yemen threatened shipping in the Red Sea. The US Central Command said military command centers, launch sites and air defenses in Iran were targeted, and Iran attacked US military sites in Kuwait and Jordan. (Bloomberg)

Oil prices are moving higher on Tuesday morning, tempered at least for now by reports that mediators are proposing a 10-day ceasefire. However, major differences remain between Washington and Tehran while U.S. President Donald Trump has warned of retaliation after several U.S. soldiers were killed. While there are those who view these latest U.S. attacks as an attempt to strengthen its negotiating position before a compromise that reopens the Strait of Hormuz, the risk is a prolonged stalemate with higher oil prices and supply chain issues. Lloyd’s List Intelligence recorded just 53 vessel transits in the week through July 20, down 66% from 157 the previous week. Tanker and gas carrier movements, which are the ships responsible for transporting most Gulf crude oil and liquefied natural gas, dropped to 30 crossings from 90.

2. Donald Trump is poised to unleash fresh tariffs on dozens of countries as soon as this week, even as his advisers warn him against risking the economic shocks of his original trade war ahead of the midterm elections. US officials have prepared options to allow Trump to launch new tariffs on dozens of countries as the president’s 10 per cent global duties expire later this week, according to people briefed on the plans. (FT)

President Donald Trump unveiled 50% tariffs on a wide range of imports from Canada on Monday in response to what the U.S. administration called its discriminatory treatment of American-made cars, alcohol and dairy goods, threatening a new front in a global trade war. In slapping import taxes on goods ranging from ‌wine to cement and ice hockey gear, Trump invoked Section 338 of the Tariff Act of 1930, which permits a president to impose punitive tariffs of up to 50% against trading partners deemed to have discriminated against U.S. goods. That marked the law’s first known usage in nearly a century of existence. (Reuters)

Our understanding is the Trump tariffs that could be unveiled this week will fall between 10% and 12.5% on 60 countries over forced labor practices, and were first proposed by U.S. trade officials in June. The administration has been clear about rebuilding its “tariff wall” as “Liberation Day” tariffs expire this Friday, but should it increase the size of that wall, it runs the risk of renewed inflation pressures and geopolitical tension ahead of the 2026 mid-term elections. We will be looking to see what is unveiled later this week, and hopefully the upsized tariffs on Canada are not a harbinger of what lies ahead.

On the topic of those mid-term elections, a July Washington Post-ABC News-Ipsos polling, 65% of U.S. adults disapprove of Trump’s handling of the economy, compared to 33% who approve. This is in addition to 66% of households describing groceries in general as “unaffordable,” and the 59% who believe they do not have a “good chance of improving” their standard of living.

That sets the table for our next item.

3. Americans’ application rate for new credit over the last year hit its highest level in ‌nearly five years in June, new data from the Federal Reserve Bank of New York released Monday said. The bank said that the rate of applying for new ⁠credit of any type was at its highest level since October 2021, based on findings from its latest Survey of Consumer Expectations Credit Access Survey… The New York ⁠Fed also said that in its June survey respondents said that the likelihood of needing to come ⁠up with $2,000 for an unexpected expense ticked up to 34%, up slightly from the ⁠last finding in February, but under the 36% reported in June a year ago. (Reuters)

While some may view the above as consumers feeling more confident about the economy, our thinking is they are looking for some extra cushion as they contend with ongoing inflation pressures. Leading our thinking on that, credit card debt in the U.S. was $1.25 trillion at the end of Q1 2026 with the average American carrying $6,595 in credit card debt per data published by Capital One (COF).

To that we can add the following two items: Data from LendingTree (TREE) indicated that the average U.S. credit card interest rate remained at 23.79% in July, marking the second straight month — and third in the past four — that the rate was unchanged. Coming into 2026, a December 2025 survey from PYMNTS found that about 40% of consumers were living paycheck to paycheck out of necessity, waiting on their next paycheck to cover expenses signals. That was before the re-acceleration in inflation pressures that began earlier this year. From a Portfolio perspective, that pain point keeps us bullish on Costco (COST), TJX (TJX) and Amazon (AMZN).

4. TSMC, the world’s largest contract chipmaker, plans to raise chipmaking prices by up to 10% from 2027 to ‌offset rising costs for materials, manufacturing equipment and overseas plant construction, Nikkei Asia reported on Tuesday, citing multiple sources. (Reuters)

UK semiconductor wafer maker IQE on Tuesday raised its full-year revenue growth forecast after its first-half ‌trading beat expectations, driven by rising demand for its semiconductor products used in AI infrastructure and data centres. IQE upgraded its 2026 revenue ⁠growth forecast to above 30%, from 20% previously and said core profit would reach the low-teens millions of pounds. (Reuters)

The ability of companies to lift pricing when demand is weak is something we rarely see. With this move, Taiwan Semiconductor (TSM) joins Micron (MU), Samsung (SSNLF) and others in lifting prices amid robust chip demand to help offset rising production costs and capacity expansion plans. The downstream effect is one that will stoke inflation pressures, especially if TSM’s customers follow with their own price increases to offset added margin pressures.

The read through for us is that robust AI and data center chip demand continues as does the need to add incremental capacity to address demand for that end market and others. That keeps us bullish on the Portfolio’s chip holdings.

5. Morgan Stanley took a mixed stance on software stocks Tuesday, growing bearish on Adobe and Workday even as it maintained an “Attractive” view on the sector overall… Adobe’s shift toward freemium pricing, along with changes in its CEO and CFO, and a move toward heavier AI reinvestment, “elongate the path to durable annual recurring revenue (ARR) reacceleration,” the analysts wrote… Salesforce and Intuit were both started at Equal-weight. For Salesforce, Wood pointed to a “tale of two cities,” noting that strong momentum in Agentforce and Slack has not been enough to offset weaker areas such as Commerce and Tableau, with overall organic growth slowing. (Yahoo! Finance)

That is another blow for software stocks as it rekindles worries over AI related disruption to their business models. However, Morgan Stanley did go on to name Portfolio holding Microsoft (MSFT) as one of its highest-conviction Overweight rated stocks. Also in that camp are Palo Alto Networks (PANW), CrowdStrike (CRWD) and Cloudflare (NET), which account for 23% of the basket inside the Portfolio’s First Trust Nasdaq Cybersecurity ETF (CIBR) holding.

6. D.R. Horton, the U.S.’s largest home builder posted better-than-expected third-quarter results Tuesday, suggesting that the worst may be over for the industry… D.R. Horton reported net income of $3.20 a share on revenue of $9.2 billion for its fiscal third quarter. Analysts were forecasting earnings of $2.97 a share on revenue of $9.1 billion, according to a FactSet poll. (Barron’s)

Not so fast Barron’s. DR Horton’s (DHI) sales order backlog fell to 15,983 homes exiting Q2 2026, down from 16,882 at the end of Q1 2026. The value of that backlog also declined quarter over quarter, while its margin on homebuilding income before income taxes fell to 12.2% in Q2 2026 compared to 13.9% in the year-ago quarter. On Tuesday morning’s earnings call, we’ll be listening for comments about the use of incentives to win orders as well as management’s thoughts on the implications of Trump’s incremental tariffs on Canada. The U.S. relies on Canada for roughly 40% of its softwood lumber, which makes up about 30% of all wood used in domestic home construction.

7. Economic data today per TipRanks: ADP Employment Change Report (Weekly).

8. Companies reporting today per TipRanks: AM – 3M (MMM), Charles Schwab (SCHW), DR Horton (DHI), Danaher (DHR), General Motors (GM), Halliburton (HAL), Hasbro (HAS), MSCI (MSCI), Northrop Grumman (NOC), Synchrony Financial (SYF). PM – Alaska Air (ALK), Capital One (COF), Interactive Brokers (IBKR).

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At the time of publication, TheStreet Pro Portfolio was long AMZN, CIBR, COST, MSFT, MU, and TJX.