Key Takeaways:
The Nasdaq gained 1% to 25,373.85 as Amazon's 15% surge offset Apple's 7.4% slide, which erased $357.8 billion in market value.
"It's like being on a whale-watching trip. Everybody rushes to the side of the boat where there's a whale, then rushes back to the other side when the whale swims under the boat," said Steve Sosnick, chief strategist at Interactive Brokers.
The S&P 500 rose 0.7% to 7,489.72 and the Dow Jones Industrial Average advanced 277 points to 52,485.03, with trading volume of 20.6 billion shares versus a 17.1 billion average over the prior 20 sessions. Beneath the headline gains, the S&P 500's technology sector fell 0.5% on Apple's drop while the consumer-discretionary sector, home to Amazon, surged 6.1%. Amazon's rally, its largest single-day market-cap gain on record, followed second-quarter revenue of $200.6 billion and AWS cloud sales that grew 37% year over year, the fastest pace in 18 quarters. Apple's decline, its steepest since 2014, came after the iPhone maker guided September-quarter revenue growth of 9% to 11%, below the roughly 12% Wall Street expected, citing supply constraints and higher memory costs.
The moves unfolded against a hawkish Federal Reserve backdrop. Three central bank officials dissented in favor of raising interest rates this week, pushing the 10-year Treasury yield to 4.743%, its highest since January 2025, and the 30-year yield to 5.274%, a 19-year high. The Dow closed July up 0.3%, while the S&P 500 edged down 0.1% and the Nasdaq slipped 3.2% for the month. Microsoft, which jumped 15.5% after reporting Azure revenue growth of 43%, and Amazon helped calm concerns that heavy AI capital spending would not translate into profits, though Apple's warning kept hardware names under pressure. In South Korea, the AI-fueled Kospi jumped 18% after a volatile stretch, while crude oil traded near $87.93 a barrel on Middle East supply risks.
Amazon's results also steadied the corporate bond market for AI hyperscalers. The extra yield investors demand to hold its 6.1% bonds due in 2056 over Treasurys narrowed to 1.1 percentage point from 1.23 percentage point Thursday, according to MarketAxess, with similar tightening across Meta Platforms, Alphabet and Oracle debt. Investors now turn to July payrolls data, expected to show 83,000 jobs added, and a possible Fed rate increase in September, with more than a quarter of S&P 500 constituents reporting earnings next week.
This article is for informational purposes only and does not constitute investment advice.
