Wall Street Lunch: Ban Talk Lifts Networking Names
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Networking names rally as U.S. eyes another China ban. (00:11) CoreCivic (CXW) secures five-year ICE agreement. (02:48) McDonald’s (MCD) shares rise despite a sales miss. (03:30)
This is an abridged transcript of the podcast:
The Trump Administration is in the process of drafting a ban on the import of Chinese optical transceivers, a key component in the building of data centers.
According to a Reuters report, which cited sources familiar with the issue, the import ban is being drafted to prevent Chinese hardware manufacturers from installing malware, collecting data or disrupting services at U.S. data centers via these optical transceivers.
Several networking stocks surged during Tuesday trading. Lumentum (LITE) is up 7%, Coherent (COHR) +13% and Ciena (CIEN) is 5% higher.
Optical transceivers serve as pluggable hardware modules that convert electrical signals into light pulses for fiber-optic networks. They combine a transmitter and a receiver into a single housing unit to link switches, routers, and servers.
The U.S. Federal Communications Commission is the body in charge of drafting the measure and could publish it before the year is out, the report said. The FCC has recently imposed similar import bans on drones, inverters, robots and routers manufactured in China.
InnoLight Technology, which is based in Suzhou, China, ranks as the world’s top supplier of optical transceivers. Some of its major clients include Google (GOOG)(GOOGL), Meta (META) and Nvidia (NVDA).
Cisco (CSCO), Broadcom (AVGO) and Intel (INTC) also produce these devices. These stocks were up 3%, 4% and 8%, respectively.
Snap (SNAP) +13% – Shares jumped after the social media company beat Q2 estimates, reported stronger-than-expected user growth, and issued solid Q3 guidance.
Palantir Technologies (PLTR) +24% – Shares surged after the software company crushed Q2 results and raised its full-year outlook.
Looking to the economy, In June, U.S. factory orders slipped 0.3% to $656.5B, vs. +0.4% consensus.
We also told you on Wall Street Breakfast that the Job Openings and Labor Turnover Survey numbers would be released. In June, U.S. job openings declined to 7.359M from 7.537M prior and were slightly higher than the 7.350M consensus. The job openings rate of 4.4% ticked down from 4.5%. Hirings increased to 5.348M from 5.252M in May (revised from 5.170M).
In other news of note: CoreCivic (CXW) announced on Tuesday that it won a five-year contract with U.S. ICE to operate a 1,600-bed facility in Appleton, Minnesota.
The contract starts Aug. 11, 2026 and it reactivates a facility that has been idle since 2010.
The agreement includes a fixed monthly payment and an additional per diem payment based on detainee population.
The company expects the contract to have an immaterial impact on 2026 earnings, due to startup activities and a phased intake process.
Once the facility is fully operational, CoreCivic (CXW) expects it to generate approximately $75 million in annual revenue.
McDonald’s Corporation (MCD) moved higher on Tuesday after reporting second-quarter earnings results. Global comparable sales rose 1.3% in Q2 to miss the +1.5% consensus estimate.
Operating income was up 3% year over year to $3.34B. Earnings per share of $3.38 beat the consensus estimate of $3.32.
Shares of McDonald’s (MCD) are up 1%.
In the Wall Street Research Corner: Apollo Global Management’s chief economist, Torsten Sløk has argued that the classic 60/40 portfolio—long the cornerstone of balanced investing—has lost its effectiveness.
Equity performance is no longer primarily tied to the broader business cycle, the economist said. Instead, returns have become heavily concentrated in a narrow set of artificial-intelligence leaders. At the same time, bond returns are increasingly dictated by fiscal pressures and rising government debt rather than traditional economic fluctuations.
The greater danger, Sløk notes, lies in a potential reversal of the AI trade or heightened market concern over fiscal deficits. In either case, stocks and bonds could come under simultaneous pressure, stripping investors of their traditional hedge and forcing a fundamental reassessment of asset-allocation strategies.
