Weekly Wrap

The stock market endured another volatile week, yet the S&P 500 demonstrated impressive resilience, briefly eclipsing the 7,500 level on Friday before settling just below that mark. Investors navigated a busy week highlighted by the FOMC meeting, a flood of earnings reports, sharp swings in oil prices and Treasury yields, and renewed volatility across semiconductor stocks.

Although the Federal Reserve left the target range for the fed funds rate unchanged at 3.50%-3.75%, three dissents favoring a rate hike and Fed Chair Kevin Warsh's inflation-focused remarks tempered the market's initial relief rally. Meanwhile, the 10-year Treasury yield climbed from 4.60% early in the week to 4.75% on Friday as oil prices rebounded and inflation concerns persisted. WTI crude oil ultimately settled at $84.57 per barrel, gaining 21% during July.

Corporate earnings ultimately dictated market leadership. Semiconductor stocks remained under heavy pressure early in the week as investors questioned AI infrastructure spending and memory demand, but sentiment shifted dramatically after Microsoft's blowout results and optimistic outlook reignited enthusiasm for the AI trade. That reversal was aided by reports that hedge fund Situational Awareness had liquidated its public equity portfolio following steep losses in AI-related investments, a development many investors viewed as a clearing event after weeks of deteriorating sentiment.

The recovery gained further traction Friday when Amazon delivered another standout quarter, reinforcing confidence in AI-driven infrastructure spending and helping investors look past Apple's disappointing fiscal Q4 revenue guidance. Amazon's 15% surge, together with strong gains in Alphabet, Microsoft, and NVIDIA, carried the major indices higher despite rising Treasury yields, firmer oil prices, and only modestly positive market breadth.

Riding Amazon's gain on Friday, the consumer discretionary sector finished the week up 8.3%, leaving it at the top of the performance rankings. Next in line was communication services (+5.4%), consumer staples (+1.2%), and financials (+1.1%). Utilities (-4.2%) was the worst-performing sector.

On the economic front, second-quarter GDP growth slowed to 1.5%, but consumer spending remained resilient, initial jobless claims stayed below 200,000, and June PCE inflation moderated on a year-over-year basis. Even so, inflation remains well above the Federal Reserve's 2.0% target, leaving investors focused on the likelihood that monetary policy could remain restrictive for some time.

• Nasdaq Composite: +1.6% week-to-date
• S&P 500: +1.0% week-to-date
• DJIA: +1.0% week-to-date
• Russell 2000: +0.05% week-to-date
• S&P Mid Cap 400: -0.7% week-to-date
  
  

Monday:

After opening firmly higher, stocks surrendered most of their early gains as another bout of weakness across semiconductor stocks offset broad strength fueled by a sharp decline in oil prices. The S&P 500 finished little changed, while the Nasdaq Composite slipped 0.2% and the DJIA gained 0.5%.

Semiconductor stocks remained under pressure throughout the session despite improved sentiment surrounding Asian technology stocks overnight. The information technology sector fell 1.0%, while the PHLX Semiconductor Index lost 2.2% as weakness across memory and AI infrastructure names continued. NVIDIA (NVDA 196.53, -10.31, -4.98%) finished as the worst-performing "Magnificent Seven" stock, reinforcing the group's outsized influence on the broader indices.

The weakness in semiconductors contrasted with strength elsewhere in technology. Apple (AAPL 336.91, +3.89, +1.17%) climbed to another all-time high, while software stocks significantly outperformed. The iShares Expanded Tech-Software Sector ETF (IGV) gained 3.3%, with many of the day's best-performing S&P 500 components coming from the software industry.

Broader market participation remained constructive despite the mixed finish for the major averages. The S&P 500 Equal Weight Index (+0.7%) outperformed its market-cap-weighted counterpart, while the Russell 2000 gained 0.7% and the S&P MidCap 400 added 0.3%. Seven of the 11 S&P 500 sectors finished higher, underscoring that today's weakness remained concentrated in a relatively small group of large-cap semiconductor stocks.

The communication services sector rose 1.5% as Alphabet (GOOG 326.57, +7.48, +2.34%) rebounded from last week's post-earnings selloff. The consumer staples (+1.6%) and financials (+1.0%) sectors also finished among the market leaders.

Tesla (TSLA 309.22, -3.81, -1.22%), however, remained under pressure following last week's earnings report, limiting gains in the consumer discretionary sector (+0.8%) despite a strong showing from its oil- and rate-sensitive components.

Energy was the weakest-performing sector, falling 2.0% as crude oil prices tumbled. Bloomberg reported that President Trump said there is a "good chance" of reaching a deal with Iran after previous reports that the U.S. has halted military strikes, helping send crude oil futures down $6.69 (-7.5%) to settle at $82.65 per barrel. Baker Hughes (BKR 60.59, +3.34, +5.83%), however, bucked the broader sector weakness following a better-than-expected earnings report.

Investors now turn their attention to one of the busiest weeks of earnings season, with several mega-cap technology companies set to report alongside key inflation data and Wednesday's FOMC policy decision. While semiconductors continue to drive much of the day-to-day movement in the major averages, today's session suggested that broader participation remains on firmer footing beneath the surface.

U.S. Treasuries began the week with a modest extension of their gains from Friday, though the market made little intraday progress past its higher start. Treasuries made it back to their opening levels as equities struggled to sustain their starting gains, holding steady after the U.S. Treasury sold $69 bln in 2-year notes to good demand. The market edged to fresh highs in the early afternoon but dipped back to starting levels with some pressure from a weak $70 bln 5-year note sale. The 2-year note yield settled down one basis point to 4.32%, and the 10-year note yield settled down four basis points to 4.64%. 

Reviewing today's data:

• Durable goods orders rose 0.3% month-over-month in June (Briefing.com consensus 2.0%) after an upwardly revised 4.0% decrease (from -4.5%) in May. Excluding transportation, durable goods orders were up 0.6% month-over-month (Briefing.com consensus 0.9%) after increasing an upwardly revised 1.8% (from 1.3%) in May.
  
  • The key takeaway from the report is that the headline miss masked upward revisions to readings from May and concealed a 0.9% increase in new orders for nondefense capital goods excluding transportation, which is considered a proxy for business spending. On a year-over-year basis, these orders are up 9.3%.

Tuesday:

Stocks finished mostly higher as broad earnings-driven strength and another sharp decline in oil prices helped offset continued weakness across semiconductor stocks. The S&P 500 gained 0.2%, while the Nasdaq Composite slipped 0.2% and the DJIA climbed 1.0%.

The latest round of earnings reports drove buying across much of the market, with seven S&P 500 sectors finishing higher. The health care sector (+2.4%) led the advance behind a strong post-earnings gain in IQVIA (IQV 243.31, +30.09, +14.11%), while the consumer staples sector (+2.0%) also outperformed as Coca-Cola (KO 88.27, +4.20, +5.00%) traded higher following its quarterly results. Similarly, the materials sector remained among the session's leaders after Sherwin-Williams (SHW 354.27, +27.00, +8.25%) rallied on a better-than-expected earnings report.

Meanwhile, the communication services (+1.6%) drew support from Alphabet (GOOG 332.60, +6.03, +1.85%), which extended its rebound from last week's post-earnings selloff.

The broader market also remained stronger than the headline indices suggested, with the S&P 500 Equal Weight Index (+1.1%) outperforming its market-cap-weighted counterpart despite another difficult session for semiconductor stocks.

The information technology sector fell 1.2% as the PHLX Semiconductor Index tumbled 4.5%, extending its month-to-date decline to nearly 23%. Memory stocks remained under pressure ahead of SK hynix Inc.'s (SKHY 130.17, -12.85, -8.98%) earnings report Wednesday morning, with investors looking for additional insight into AI-driven HBM demand, memory pricing trends, and the broader outlook for the group.

Outside of semiconductors, however, weakness was relatively contained. The Vanguard Mega Cap Growth ETF slipped just 0.1% as Alphabet continued to recover from last week's post-earnings decline, while Apple (AAPL 340.08, +3.17, +0.94%) climbed to another record high, and Microsoft (MSFT 393.35, +4.25, +1.09%) also advanced ahead of their quarterly reports later this week.

Meanwhile, the energy sector (-1.4%) posted the market's largest decline as crude oil prices continued to retreat. Reuters reported that Oman presented Iran with a proposal for voluntary transit fees through the Strait of Hormuz that has the backing of Gulf states, while a separate Reuters report said China held direct discussions with the Houthis regarding safe passage through the Red Sea. Those developments helped send WTI crude futures down $3.33 (-4.0%) to settle at $79.32 per barrel.

Attention now turns to Wednesday's FOMC policy decision, with the CME FedWatch Tool currently implying a 31.5% probability of a rate hike. Investors will also be watching SK Hynix's earnings before the open, as it has been a focal point of recent volatility across the semiconductor space, followed by another busy slate of large-cap technology earnings later this week, for additional insight into AI demand and the broader corporate earnings outlook.

U.S. Treasuries climbed again on Tuesday, making for the third consecutive day of gains after most tenors set fresh 2026 lows late last week. The 2-year note yield settled down four basis points to 4.28%, and the 10-year note yield settled down four basis points to 4.60%. 

Reviewing today's data:

• June Adv. Intl. Trade in Goods -$101.5 bln; Prior was revised to -$105.9 bln from -$105.8 bln
• June Adv. Retail Inventories 0.0%; Prior was revised to 0.5% from 0.6%
• June Adv. Wholesale Inventories 0.3%; Prior 0.3%
• May FHFA Housing Price Index 0.3% (Briefing.com consensus 0.0%); Prior -0.1%
• May S&P Case-Shiller Home Price Index 1.6% (Briefing.com consensus 1.3%); Prior was revised to 1.2% from 1.1%
• July Consumer Confidence 90.8 (Briefing.com consensus 92.1); Prior was revised to 92.2 from 91.2
  • The key takeaway from the report is that consumers don't appear to be overly enthused about current business conditions or future business conditions.

Wednesday:

The major averages finished sharply lower on Wednesday, with the S&P 500 (-1.5%), Nasdaq Composite (-1.7%), and DJIA (-2.2%) settling near their session lows after an initial post-FOMC relief rally ultimately gave way to renewed selling pressure.

Earlier weakness was driven by another sharp advance in oil prices and continued semiconductor selling, while the Federal Reserve's decision to leave interest rates unchanged briefly lifted growth stocks before that enthusiasm faded into the close. Crude oil futures settled $5.16 higher (+6.5%) at $84.48 per barrel following reports that the U.S. intercepted Iranian missiles targeting U.S. bases across the Middle East, with President Trump vowing retaliation. The energy sector (+2.1%) finished comfortably atop the leaderboard as a result, while the defensive consumer staples sector (+0.4%) also managed a modest gain amid the market's risk-off tone and another record close for Coca-Cola (KO 89.13, +0.86, +0.97%).

The communication services sector (+0.2%) managed to avoid a lower finish, supported by strength in Alphabet (GOOG 335.76, +3.16, +0.95%), although Meta Platforms (META 585.61, -7.80, -1.31%) traded lower ahead of its quarterly results.

This afternoon's focal point was the FOMC policy decision, which left the fed funds target range unchanged at 3.50%-3.75%, as widely expected. Unlike June's unanimous decision, however, three regional Fed presidents dissented in favor of a 25-basis point rate hike. The announcement initially fueled a broad rebound across growth-oriented stocks as investors welcomed the absence of another rate increase, lifting the Vanguard Mega Cap Growth ETF into positive territory and dramatically narrowing semiconductor losses. That momentum proved short-lived, however, as the post-FOMC rally steadily unraveled during Fed Chair Kevin Warsh's press conference, leaving the major averages back near their lows by the closing bell.

The top-weighted information technology sector (-2.5%) surrendered its post-Fed gains and finished among the session's laggards as semiconductor stocks resumed their retreat. The PHLX Semiconductor Index finished 5.3% lower, with KLA Corporation (KLAC 170.19, -20.61, -10.80%) remaining under pressure following its quarterly results and NVIDIA (NVDA 190.01, -7.00, -3.55%) ranking among the weakest-performing "Magnificent Seven" components.

SK hynix Inc.'s (SKHY 126.86, -3.31, -2.54%) U.S.-listed shares also declined despite another quarter of record results, as investors looked beyond continued strength in AI-driven HBM demand and instead focused on the company's elevated capital spending plans and aggressive capacity expansion.

The Vanguard Mega Cap Growth ETF likewise erased its afternoon rebound to finish down 1.6%.

The industrials sector (-3.2%) finished with an even wider loss as disappointing earnings from Lennox Int'l (LII 430.27, -113.84, -20.92%) and Vertiv (VRT 223.09, -46.47, -17.24%) weighed heavily on the group, while other electrical product names lagged amid the weakness in semiconductor names.

The utilities (-1.4%) and financials (-1.6%) sectors also ranked among the session's laggards.

Outside the S&P 500, the Russell 2000 (-1.6%) and S&P Mid Cap 400 (-1.7%) finished with losses comparable to those of the major averages.

Despite a brief post-FOMC rebound that temporarily lifted growth stocks and narrowed semiconductor losses, the market ultimately returned to the same themes that pressured the market throughout the morning. Higher oil prices, geopolitical uncertainty, and persistent weakness across semiconductor stocks kept broader sentiment in check, leaving attention squarely focused on quarterly results from Microsoft (MSFT 390.54, -2.81, -0.71%) and Meta Platforms (META 585.61, -7.80, -1.31%) after the close, which will provide the market's next major test of AI spending, earnings momentum, and investor sentiment. With little offsetting strength elsewhere in the market, another wave of semiconductor selling continued to weigh heavily on the major averages, leaving the Nasdaq Composite with less than half of the year-to-date gain it carried into July.

U.S. Treasuries had a mixed showing on Wednesday, as the 2-year note recorded a slim gain while longer tenors retreated, pulling back from three days of consecutive gains. The final standing was a change from the opening dynamic, which saw relative weakness up front and outperformance in the 30-year bond as the market awaited the FOMC statement for July. The 2-year note yield settled down four basis points to 4.24%, and the 10-year note yield settled up two basis points to 4.62%. 

Reviewing today's data: 

• Weekly MBA Mortgage Applications Index -6.4%; Prior 1.9%

Thursday:

Today was more than a buy-the-dip trade. It was a return to the AI trade. The impetus for the return was rooted in earnings results and guidance from Microsoft (MSFT 451.10, +60.56, +15.51%) and Lam Research (LRCX 297.72, +45.37, +17.98%), which triumphed over all other corporate news. Arguably, a CNBC report that hedge fund Situational Awareness was forced to sell its entire book of public investments due to steep losses in its AI investments also acted as a catalyst for the rebound, as this news was viewed by some to be a "clearing event" for an AI trade that had been looking rather wobbly leading up to today's session.

Whatever the case may have been, there is no denying that Microsoft and the semiconductor stocks carried the stock market today.

Microsoft's move was gargantuan and far-reaching, impacting the Dow Jones Industrial Average, Nasdaq 100, and S&P 500 information technology sector (+5.2%) in a favorable light and providing a welcome distraction from the disappointments out of Meta Platforms (META 539.03, -46.58, -7.95%), Qualcomm (QCOM 151.54, -4.14, -2.66%), and Norwegian Cruise Line (NCLH 18.72, -2.04, -9.81%), to name a few, and the ongoing clash between the U.S. and Iran.

The Philadelphia Semiconductor Index soared 8.2%.

Most of the morning trade was simply a tech sector show, but buying efforts began to broaden out in the afternoon trade, sending the major indices to new session highs. The added lift was fueled by resurgences for the industrials (+1.0%), financial (+0.6%), and energy (+0.6%) sectors, all of which had been in negative territory earlier in the day. The consumer discretionary sector (+1.6%) was the next best-performing sector after information technology.

Conversely, the main pockets of weakness today were seen in the communication services (-2.5%), consumer staples (-2.2%), health care (-1.7%), and real estate (-1.2%) sectors.

It helped, too, that bond yields remained calm after a tough session yesterday. The 10-yr note yield hit 4.71% overnight but settled at 4.66% with oil prices pulling back, PCE inflation decelerating in June on a year-over-year basis, and Q2 GDP increasing a weaker-than-expected 1.5%.

There was still plenty of chatter in the market, though, about inflation remaining sticky well above the Fed's 2.0% target and the Fed's inflation-fighting credibility after it refrained from raising the target range for the fed funds rate yesterday. The Bank of England did as well today, voting 6 to 3 to leave its key bank rate unchanged at 3.75%.

The Bank of Japan will issue a policy announcement overnight. It is expected to leave its key policy rate unchanged at 1.00%, so it would be a surprise if the bank announced a rate hike. There was some notable strengthening in the yen today against the dollar (USD/JPY -2.5% to 159.36) ahead of the decision, prompting speculation that there was an official intervention effort on the part of Japan's government to strengthen the currency.

The U.S. market, though, traded in its own bubble (no pun intended), relishing the strength of many of its mega-cap leaders, including Amazon (AMZN 235.50, +8.85, +3.90%), which reports its results after the close. Apple (AAPL 333.43, -4.76, -1.41%) does, too, but it sat out today's advance, having made a solid move already in recent weeks leading up to its report.

Reviewing today's data:

• The Advance Q2 GDP report showed real GDP increasing at an annual rate of 1.5% (Briefing.com consensus: 2.3%) on the heels of a 2.1% increase for Q1. The GDP Price Index increased by a whopping 6.3% (Briefing.com consensus: 3.7%) following a 3.6% increase in Q1.
  • While the headline GDP print is a bit disappointing, it is not as soft as it appears knowing that net exports subtracted 1.01 percentage points. The bright spot was the pickup seen in personal spending (+3.2% from +0.5%) and final sales to private domestic purchasers (+3.9% from +1.7%).
• Initial jobless claims for the week ending July 25 increased by 9,000 to 197,000 (Briefing.com consensus: 203,000). Continuing jobless claims for the week ending July 18 decreased by 7,000 to 1.782 million.
  • The key takeaway from the report is initial claims remaining below 200,000, which is an historically low level and indicative of a solid labor market where layoff activity is quite low.
• Personal income increased 0.2% month-over-month in June (Briefing.com consensus: 0.3%), personal spending jumped 0.3% (Briefing.com consensus: 0.4%), the PCE Price Index was down 0.1% (Briefing.com consensus: -0.1%), and the core-PCE Price Index rose 0.1% (Briefing.com consensus: 0.2%). On a year-over-year basis, the PCE Price Index was up 3.7% versus 4.1% in May, and the core-PCE Price Index was up 3.3% versus 3.4% in June.
  • The key takeaway from the report, taking into account Fed Chair Warsh's demonstrative statement that the Fed doesn't have a soft inflation target but a hard target of 2.0%, is that the PCE Price Index remains well above 2.0%.

Friday:

What Microsoft (MSFT 464.72, +13.62, +3.02%) and the semiconductors did for the stock market on Thursday, Amazon (AMZN 271.58, +36.08, +15.32%) and several of its mega-cap brethren did for the stock market on Friday.

It was an impressive follow-up act that had a similar overlay, right down to the opposing force of a mega-cap laggard. On Thursday, that laggard was Meta Platforms (META 556.71, +17.68, +3.28%). Today, it was Apple (AAPL 308.91, -24.52, -7.35%), which was sent packing after providing disappointing fiscal Q4 revenue guidance that it attributed to supply constraints and negative FX effects.

Fortunately, Apple's struggles did not pull down the market, partly because there was a recognition that Apple's problem is a supply problem and not a demand problem. At the same time, other mega-cap leaders, namely Alphabet (GOOG 356.65, +22.97, +6.88%), NVIDIA (NVDA 200.75, +5.71, +2.93%), and Microsoft, flexed their muscles, and along with Amazon, more than made up for Apple's losses.

Today's session started in a roller-coaster fashion. The S&P 500 ran up to 7,490, but no sooner had it done that than it was back at 7,400, undercut by a steady rise in Treasury yields, rising oil prices, and a rollover by the semiconductor stocks, which had a boisterous start on the heels of a 17.9% gain in South Korea's Kospi Index that was led by SK Hynix and Samsung Electronics.

Treasury yields and oil prices remained elevated throughout today's trade, and semiconductors, as a group, stalled, yet the stock market made a steady advance for most of today's session that saw the S&P 500 scale the wall at 7,500 shortly before today's close, only to lose that ground in the last minute of trading.

The 10-yr note yield, for its part, jumped eight basis points today to 4.75%, leaving it up 33 basis points for the month in a move that coincided with rising oil prices. WTI crude futures settled today up 1.2% at $84.57/bbl but rose 21% in July.

That move fueled the S&P 500 energy sector, which was the market's best-performing sector this month, gaining 12.6%.

Like Thursday, participation in the stock market's advance was fairly narrow. Breadth favored decliners by a slim margin at the NYSE and Nasdaq. The Russell 2000 was down 0.5%; the equal-weighted S&P 500 was down 0.2%; and seven of the 11 S&P 500 sectors finished lower. The two best-performing sectors today were the consumer discretionary (+6.1%) and communication services (+4.6%), which were led by Amazon and Alphabet, respectively.

Reviewing today's data:

• The Q2 Employment Cost Index increased 0.9% (Briefing.com consensus: 0.8%) on the heels of a 0.9% increase in Q1, with wages and salaries up 0.9% and benefit costs up 1.0%.
  • The key takeaway from the report is that wages and salaries for civilian workers, up 3.2% year-over-year, are not keeping up with inflation. That could eventually lead to reduced discretionary spending activity.
• The final reading for the University of Michigan Consumer Sentiment Index for July increased to 55.2 (Briefing.com consensus: 54.4) from the preliminary reading of 54.4 and the final reading of 49.5 for June. In the same period a year ago, the index stood at 61.7.
  • The key takeaway from the report is that sentiment held okay in July, even as gas prices started to rise again amid increased military hostilities between the U.S. and Iran.
• July Chicago PMI 57.6 vs. 56.5 Briefing.com consensus; prior 56.7