The S&P 500 rose 2.3% for the week, its best five-day stretch since early June. The Nasdaq Composite surged 3.1%, driven by blowout results from Alphabet (GOOGL) and Tesla (TSLA), while the Dow Jones Industrial Average added a more modest 1.4%, hampered by lagging industrials and healthcare names.
Tech Earnings Deliver — and Then Some
The week’s marquee event was the latest round of Big Tech earnings, and they didn’t disappoint.
- Alphabet shares popped 7.2% after the company reported a surprise acceleration in ad revenue and unveiled a new $80 billion stock buyback plan.
- Tesla soared 12.5%, its best weekly performance since January, after beating both top and bottom line estimates and touting its first profitable quarter for its AI and energy storage divisions.
With over half of S&P 500 companies now having reported, 76% have beaten EPS estimates, well above the long-term average of 66%, according to FactSet.
“Investors were bracing for a bumpy quarter, but what they got was more of the same — Big Tech dominance, cost control, and margin expansion,” said Alicia Browning, Chief Market Strategist at Horizon Equity Partners.
Rate Cut Optimism Returns
Adding fuel to the rally was renewed hope that the Federal Reserve is poised to begin easing rates — perhaps as soon as September. Thursday’s release of the June PCE inflation report showed price increases slowing to 2.3% year-over-year, the lowest since early 2021.
Fed futures now imply a 68% probability of a rate cut in September, according to CME FedWatch, up from just 42% a week ago.
“Inflation is cooling, growth is steady, and corporate profits are holding up — that’s a rare trifecta for markets,” noted Greg Matthews, senior economist at CapitalGrid Analytics.
AI Mania, Redux
Beneath the surface, the AI trade found fresh momentum. Nvidia (NVDA) gained 6.1% on no major news, while smaller names like Arm Holdings (ARM) and SoundHound (SOUN) jumped double digits.
Even Intel (INTC), long considered an AI laggard, gained 4.7% amid chatter that it may spin off its programmable chip unit to unlock value.
“The AI wave isn’t just about Nvidia anymore,” said Clara Chen, a portfolio manager at VantageTech. “Markets are starting to price in the next tier of winners.”
Not All Sunshine
Still, not all corners of the market participated in the rally. The Russell 2000, a proxy for small-cap stocks, finished the week flat, continuing a months-long underperformance.
Defensive sectors like utilities and consumer staples also lagged, as investors rotated into higher-growth names.
Meanwhile, China-exposed multinationals such as Caterpillar (CAT) and Apple (AAPL) came under pressure after Beijing signaled potential new restrictions on U.S. goods and services in retaliation for fresh chip export controls.
The Week Ahead
Investors now turn their attention to the Fed’s July 30–31 policy meeting, where Chair Jerome Powell is widely expected to hold rates steady — but offer clues about the path ahead.
Also on tap: earnings from Amazon, Apple, and ExxonMobil, the July jobs report (due Friday), and fresh consumer confidence data.
With stocks at record highs and volatility near its lowest levels of the year, many strategists warn that markets may be entering a more fragile phase.
“Sentiment is bullish, positioning is crowded, and valuations are stretched,” said David Quinn, CIO of Horizon Ridge Capital. “That’s not a reason to sell — but it’s a reason to stay nimble.”
By: DNU staff