[BRIEFING.COM] The major averages finished mixed today as a pullback in semiconductor stocks erased much of the broader market's earlier advance. The S&P 500 (+0.1%) managed to close just above the 7,400 level after finding support there throughout the session, while the DJIA (+0.5%) outperformed and the Nasdaq Composite (-0.6%) lagged under renewed pressure from technology shares.

The broader tone of the session was nevertheless constructive. Crude oil futures settled $2.75 lower (-3.0%) at $89.34 per barrel, while Treasury yields declined modestly across the curve after a Reuters report suggested Pakistan and Iran are considering a new path toward peace talks with the U.S. following intervention from China. That optimism faded somewhat late in the day after The New York Times reported that President Trump met with top advisers to consider a major military escalation in Iran, though oil still finished well below its recent highs.

Participation remained broad beneath the surface despite the mixed finish. Ten S&P 500 sectors closed higher, and the S&P 500 Equal Weight Index rose 0.7%, outperforming the market-cap-weighted S&P 500 (+0.1%). The real estate sector (+2.5%) led the advance as lower Treasury yields and a beat-and-raise quarter from Digital Realty Trust (DLR 198.93, +19.59, +10.92%) supported the group, while the materials sector (+1.4%) also stood out behind strong gains from Smurfit Westrock plc (SW 48.57, +4.86, +11.13%) and Int'l Paper (IP 42.19, +4.28, +11.29%).

Technology remained the notable weak spot. The information technology sector (-0.9%) was the only S&P 500 sector to finish lower as the PHLX Semiconductor Index fell 4.4%, with AI infrastructure and memory names giving back ground after showing relative resilience following yesterday's hyperscaler capital expenditure announcements. Intel (INTC 92.32, -7.91, -7.89%) also weighed on sentiment after raising its 2026 capital expenditure outlook and indicating spending will increase further in 2027.

The weakness was not uniform across technology, however. The iShares Expanded Tech-Software Sector ETF (IGV) rose 1.1% as investors did some bargain hunting across software names that came under pressure following earnings yesterday.

Meanwhile, buying interest across the mega-cap complex was relatively muted. Apple (AAPL 333.02, +11.36, +3.53%) stood out as the primary "Magnificent Seven" winner, while Tesla (TSLA 313.03, -6.66, -2.08%) extended yesterday's steep decline. The Vanguard Mega Cap Growth ETF slipped 0.3%.

Elsewhere on the earnings front, Verizon (VZ 46.42, +2.60, +5.93%) advanced following a narrow EPS beat, while American Express (AXP 326.28, -14.56, -4.27%) moved lower despite topping earnings expectations after the company maintained, rather than raised, its FY26 guidance.

Looking ahead, investor attention will quickly shift to what will be the busiest week of the second-quarter earnings season, with four "Magnificent Seven" companies set to report alongside Wednesday's FOMC policy decision. Those catalysts should provide greater clarity on both the outlook for AI spending and the path of monetary policy after a volatile week for markets.

U.S. Treasuries ended the week on a higher note, but the shallow Friday bounce only recovered some of yesterday's losses, leaving the complex with solid losses for the week. The 2-year note yield settled down three basis points to 4.33% (+16 basis points this week), and the 10-year note yield settled down two basis points to 4.68% (+14 basis points this week). 

• Russell 2000: +18.1% YTD
• S&P Mid Cap 400: +14.5% YTD
• S&P 500: +8.3% YTD
• DJIA: +8.1% YTD
• Nasdaq Composite: +7.5% YTD

Reviewing today's data:

• July S&P Global U.S. Manufacturing PMI - Prelim 53.8; Prior 53.9
• July S&P Global U.S. Services PMI - Prelim 53.6; Prior 51.2
• June New Home Sales 628K (Briefing.com consensus 620K); Prior was revised to 618K from 580K
  • The key takeaway from the report is that new home sales in May were pressured by affordability constraints tied to rising mortgage rates. Notably, the West region, which features the highest-priced homes, saw the biggest hit to sales month-over-month; however, there was also weakness in the more affordable South region, which is the nation's largest homebuilding market.

[BRIEFING.COM] The S&P 500 (flat), Nasdaq Composite (-0.8%), and DJIA (+0.3%) sit mostly lower as the market enters the final half hour of the session. The S&P 500 currently sits right at the 7,400 mark, which has acted as a support level throughout the session.

Looking ahead, next week will be the busiest week of the Q2 earnings season so far, with four "Magnificent Seven" names set to report.

Additionally, the FOMC will deliver its next policy decision on Wednesday.

[BRIEFING.COM] The S&P 500 (flat), Nasdaq Composite (-0.7%), and DJIA (+0.3%) are back near session lows after a report from The New York Times that President Trump is meeting with top advisors to consider a major military escalation in Iran.

Crude oil futures still settled today's session $2.75 lower (-3.0%) at $89.34 per barrel, though the headline undermines previous developments today that pointed towards a more diplomatic path.

As for stocks, strength remains relatively broad, with eight S&P 500 sectors maintaining gains. However, the top-weighted information technology sector (-0.8%) moves firmly lower, pressured by the PHLX Semiconductor Index (-4.3%) slipping to new session lows.

[BRIEFING.COM] The S&P 500 (+0.30%) is in second place on Friday afternoon, up about 22 points.

Briefly, S&P 500 constituents Digital Realty Trust (DLR 203.04, +23.70, +13.22%), SLB (SLB 52.14, +4.92, +10.42%), and Smurfit Westrock plc (SW 47.27, +3.56, +8.14%) pepper the top of the standings. DLR rises following earnings and a TD Cowen upgrade to Buy this morning, SLB also reported earnings, and SW rallies in sympathy to containerboard stocks which found strength after a Truist note about price increases.

Meanwhile, Sandisk (SNDK 1,460.02, -150.30, -9.33%) is today's worst laggard as weakness in AI/semi stocks drags memory plays, including SNDK, lower.

[BRIEFING.COM] The tech-heavy Nasdaq Composite (-0.09%) is down about 22 points this afternoon, the only major average in the red.

Gold futures settled $20.60 higher (+0.5%) at $4,070.80/oz, finishing the week up 1.29% as investors bought the recent dip and sought safe-haven assets amid ongoing Middle East uncertainty. Markets also looked ahead to next week's Federal Reserve meeting, with expectations the central bank will hold rates steady while maintaining a cautious stance on inflation, helping support gold prices.

Meanwhile, the U.S. Dollar Index is up less than +0.1% to $101.47.

[BRIEFING.COM] The Dow Jones Industrial Average (+0.50%) is up about 257 points, leading gains among the major averages.

A look inside the DJIA shows that IBM (IBM 214.65, +8.00, +3.87%), Salesforce (CRM 162.56, +5.63, +3.59%), and Apple (AAPL 332.49, +10.83, +3.37%) hold solid gains.

Meanwhile, American Express (AXP 322.73, -18.11, -5.31%) is underperforming.

The DJIA is on pace to end the week -0.34% lower.

Also, at the top of the hour, Baker Hughes (BKR 57.65, +1.56, +2.78%) announced a weekly U.S. rotary rig count of 587, -1 w/w and +45 yr/yr.

[BRIEFING.COM] The S&P 500 (+0.4%), Nasdaq Composite (-0.1%), and DJIA (+0.5%) are mostly higher, supported by broad gains in equities amid relief in oil prices and Treasury yields today.

After tensions ratcheted up between the U.S. and Iran throughout the week, there is now some optimism that diplomatic negotiations could prevail after Reuters reported that Pakistan and Iran are considering a new path toward peace talks with the U.S. following intervention from China. Crude oil is currently down $3.84 (-4.1%) to $88.34 per barrel, and Treasury yields are lower across the curve.

All eleven S&P 500 sectors trade higher, and advancers outpace decliners by better than a 2-to-1 margin on the NYSE, while advancers edge out decliners on the Nasdaq after trailing for much of the session.

The real estate sector (+2.6%) sports the widest gain, supported by relief across Treasury yields and a beat-and-raise quarter from Digital Realty Trust (DLR 203.22, +23.88, +13.32%), which holds the widest gain among S&P 500 components.

Gains are more modest elsewhere, and the outperformance of the S&P 500 Equal-Weight Index (+1.0%) relative to the market-weighted S&P 500 (+0.4%) highlights some lingering weakness across the market's largest components following yesterday's mega-cap-led retreat. Losses are most pronounced across semiconductor names, with the PHLX Semiconductor Index down 2.8%. Intel (INTC 95.78, -4.44, -4.43%) is a laggard after beating earnings expectations but increasing its 2026 capital expenditure outlook and noting that it expects to spend even more in 2027.

AI infrastructure names such as Lumentum (LITE 772.93, -60.71, -7.28%) and memory names such as Sandisk (SNDK 1489.75, -120.58, -7.49%) are among the market's weakest performers after yesterday's increased capital expenditure forecasts from hyperscalers helped the group post modest gains.

However, the information technology sector (+0.1%) still trades modestly higher, supported by some buy-the-dip activity across several software names, including ServiceNow (NOW 97.14, +5.20, +5.66%), that lagged after earnings yesterday. The iShares GS Software ETF is up 1.2%.

Additionally, Apple (AAPL 333.15, +11.49, +3.57%) is a "Magnificent Seven" standout amid a mostly higher showing from the group. The Vanguard Mega Cap Growth ETF is up 0.3%.

Tesla (TSLA 309.10, -10.59, -3.31%), on the other hand, continues to move lower after yesterday's double-digit retreat.

Elsewhere on the earnings front, Verizon (VZ 45.42, +1.60, +3.65%) moves higher after a narrow EPS beat, while American Express (AXP 322.98, -17.86, -5.24%) lags after topping earnings expectations but keeping FY26 guidance unchanged.

For now, easing geopolitical concerns and lower oil prices are helping stabilize sentiment, though investors remain selective beneath the surface as weakness in semiconductor stocks continues to temper the broader market's advance.

Reviewing today's data:

• July S&P Global U.S. Manufacturing PMI - Prelim 53.8; Prior 53.9
• July S&P Global U.S. Services PMI - Prelim 53.6; Prior 51.2
• June New Home Sales 628K (Briefing.com consensus 620K); Prior was revised to 618K from 580K
  • The key takeaway from the report is that new home sales in May were pressured by affordability constraints tied to rising mortgage rates. Notably, the West region, which features the highest-priced homes, saw the biggest hit to sales month-over-month; however, there was also weakness in the more affordable South region, which is the nation's largest homebuilding market.

[BRIEFING.COM] The S&P 500 (+0.7%), Nasdaq Composite (+0.2%), and DJIA (+0.8%) have settled into a stable range near their session highs just after midday.

Strength remains broad, with the real estate sector (+2.6%) leading the advance amid some reprieve across Treasury yields today. The 10-year note yield is down five basis points to 4.66%.

Additionally, Digital Realty Trust (DLR 204.71, +25.37, +14.15%) holds the widest gain across S&P 500 names today after a beat-and-raise earnings report and an upgrade to Buy from Hold at TD Cowen with a target price of $222.

[BRIEFING.COM] The major averages remain near session highs, enthused by reports that the U.S. and Iran could be back on track for a diplomatic solution to the conflict.

Mega-cap stocks have improved with the broader market throughout the session, with the Vanguard Mega Cap Growth ETF now up 0.6%. Most "Magnificent Seven" names trade modestly higher, though Tesla (TSLA 309.93, -9.76, -3.05%) continues to slide after yesterday's earnings miss and raised capital expenditure outlook.

[BRIEFING.COM] The S&P 500 (+0.6%), Nasdaq Composite (+0.1%), and DJIA (+0.7%) continue to climb off their early lows as a solid showing from the broader market helps offset renewed pressure across semiconductor names.

All eleven S&P 500 sectors trade higher as the market rebounds from yesterday's broad retreat, with easing oil prices and Treasury yields adding support. Reuters reported that Pakistan and Iran are considering a new path toward peace talks with U.S. after China intervened, and crude oil is down $3.82 (-4.1%) to $88.37 per barrel.

The information technology sector (+0.1%) was the last S&P 500 sector to enter positive territory, as it is held back by a weak showing from semiconductor names today. The PHLX Semiconductor Index is down 2.9%, following a resilient showing yesterday that saw select AI infrastructure names scratch out gains as hyperscalers continued to increase their capital expenditure plans.

So far, the market is enjoying a decent bounce off yesterday's relatively broad, mega-cap-led retreat. The S&P 500 and DJIA are now little changed for the week as the market enters Friday afternoon in a familiar "semiconductors vs. the broader market" trade.

[BRIEFING.COM] The S&P 500 (+0.2%) and DJIA (+0.3%) are at their best levels of the morning, while some weakness in tech keeps the Nasdaq Composite (-0.4%) in negative territory.

Intel (INTC 96.99, -3.24, -3.23%)  is under pressure this morning despite delivering a strong beat and issuing Q3 guidance above expectations, suggesting investors are weighing improved near-term execution against a more capital-intensive and still supply-constrained outlook. The company also raised expected 2026 CapEx to more than $20 billion from $18 billion, said 2027 CapEx will be significantly above 2026, and acknowledged that demand continues to outpace supply across wafers, substrates, memory, and advanced packaging, leaving the pace of further upside dependent partly on supply expansion.

Ultimately, the market is looking for evidence that Intel's AI-driven server strength and foundry strategy are reinforcing one another, rather than forcing a tradeoff between near-term profitability and long-term competitiveness.

[BRIEFING.COM] The S&P 500 (+0.1%), Nasdaq Composite (-0.5%), and DJIA (+0.2%) now lean mostly higher as participation remains strong in the broader market while select pockets of tech lag.

New home sales increased 1.6% month-over-month in June to a seasonally adjusted annual rate of 628,000 (Briefing.com consensus: 620,000) from an upwardly revised 618,000 (from 580,000) in May. On a year-over-year basis, new home sales were down 5.6%.

The key takeaway from the report is that monthly sales increases were seen in all regions, except the high-priced West region, where added affordability constraints are posed by higher mortgage rates.

[BRIEFING.COM] The S&P 500 (-0.1%), Nasdaq Composite (-0.5%), and DJIA (+0.2%) are mixed this morning as considerable weakness across semiconductor names weighs against a broader market that leans higher.

The PHLX Semiconductor Index is down 3.1%, facing renewed selling pressure after the group showed resilience yesterday while other mega-cap tech names retreated sharply. Memory and other AI infrastructure names such as Lumentum (LITE 778.32, -55.32, -6.64%) and Sandisk (SNDK 1484.76, -125.57, -7.80%) are among the worst-perfomign S&P 500 components this morning.

Meanwhile, yesterday's laggards are putting up mixed performances. Alphabet (GOOG 321.00, +2.66, +0.84%) has garnered some early buy-the-dip interest this morning after yesterday's slog, while Tesla (TSLA 315.06, -4.62, -1.45%) continues to move lower. The Vanguard Mega-Cap Growth ETF is down 0.3%.

Outside of the information technology (-1.0%) and consumer discretionary sector (flat), nine S&P 500 sectors trade higher. The gains are largely modest, though Alphabet's bounce has the communication services sector (+0.9%) firmly higher while the real estate sector (+2.2%) benefits from Treasury yields moving lower this morning.

Just released, the preliminary reading of the July S&P Global U.S. Services PMI registered at 53.6, up from the prior reading of 51.2.

The preliminary reading of the S&P Global U.S. Manufacturing PMI registered at 53.8, down slightly from the prior reading of 53.9.

New home sales increased 1.6% month-over-month in June to a seasonally adjusted annual rate of 628,000 (Briefing.com consensus: 620,000) from an upwardly revised 618,000 (from 580,000) in May.

The stock market is now on track for a mixed open in the wake of yesterday's mega-cap-led selloff.

A Senior White House official told CNBC that the Section 301 tariffs will not stack on top of other Section 232 tariffs.

The S&P 500 futures currently trade 11 points below fair value.

Equity indices in the Asia-Pacific region ended the week on a lower note with South Korea's Kospi (-5.7%) facing renewed pressure after regulators announced that increased cash requirements for leveraged ETF purchases will come into effect sooner than originally planned. Meanwhile, South Korea's President Lee will be meeting with big tech CEOs in San Francisco today. Flash July PMI readings showed ongoing expansion in manufacturing and services sectors in Australia, Japan, and India. Japan is setting up a panel to manage the flow of foreign nationals into the country, fulfilling Prime Minister Takaichi's campaign pledge.

• In economic data:
  • Japan's June National CPI 0.3% m/m (last 0.4%); 1.7% yr/yr (last 1.5%). June National Core CPI 1.6% yr/yr, as expected (last 1.4%). Flash July Manufacturing PMI 54.7 (expected 55.0; last 54.8) and flash Services PMI 51.9 (last 52.2)
  • Australia's flash July Manufacturing PMI 51.7 (last 51.5) and flash Services PMI 53.0 (last 50.5)
  • Singapore's Q1 URA Property Index 0.5% qtr/qtr, as expected (last 0.9%)
  • India's flash July Manufacturing PMI 53.9 (last 54.2) and flash Services PMI 53.1 (last 57.4)

---Equity Markets---

• Japan's Nikkei: -2.7%
• Hong Kong's Hang Seng: -1.0%
• China's Shanghai Composite: -1.6%
• India's Sensex: -0.4% 
• South Korea's Kospi: -5.7%
• Australia's ASX All Ordinaries: -0.9%

Major European indices are looking for an upbeat finish to the week despite news that President Trump is looking to reimpose tariffs on 60 trading partners, including the EU. These tariffs will replace the 10% global tariff that is scheduled to expire. Economic data from the region was mostly surprising to the upside, with an improvement in PMI readings and the U.K. reporting strong Retail Sales growth for June (4.2%; expected 2.3%). European Central Bank policymaker Kocher said that second-round effects of inflation have not become apparent, but he is ready to vote for a September hike if needed. The ECB's latest Survey of Professional Forecasters showed no change in inflation expectations for 2026 and a ten-basis point uptick for 2027. GDP growth in 2026 is expected at 0.6%, down from the previous forecast for a 1.0% increase while the outlook for 2027 was trimmed to 1.2% from 1.3%.

• In economic data:
  • Eurozone's flash July Manufacturing PMI 52.0 (expected 51.5; last 51.4) and flash Services PMI 51.6 (expected 49.8; last 49.4)
  • Germany's August GfK Consumer Climate -29.6 (expected -28.7; last -29.3). Flash July Manufacturing PMI 52.2 (expected 50.4; last 50.3) and flash Services PMI 49.6 (expected 49.0; last 48.6)
  • U.K.'s July GfK Consumer Confidence -17 (expected -22; last -23). June Retail Sales 1.0% m/m (expected -0.3%; last 1.2%); 4.2% yr/yr (expected 2.3%; last 3.5%). June Core Retail Sales 1.1% m/m (expected -0.4%; last 1.2%); 5.4% yr/yr (expected 3.2%; last 4.9%). Flash July Manufacturing PMI 52.8 (expected 52.0; last 52.5) and flash Services PMI 51.8 (expected 49.4; last 48.8)
  • France's flash July Manufacturing PMI 50.0 (expected 51.0; last 51.2) and flash Services PMI 49.8 (expected 47.5; last 46.8)

---Equity Markets---

• STOXX Europe 600: +0.4% 
• Germany's DAX: +0.8% 
• U.K.'s FTSE 100: +0.2%
• France's CAC 40: +0.2% 
• Italy's FTSE MIB: +0.6% 
• Spain's IBEX 35: +0.9% 

The S&P 500 futures currently trade in-line with fair value.

Following yesterday's retreat, the "Magnificent Seven" are making muted moves in the premarket, except for Microsoft (MSFT 386.48, +4.65, +1.2%), which trades higher in conjunction with the broader software space. The iShares Expanded Tech-Software ETF (IGV) is up 1.2% in the premarket.

Stock index futures point to a flattish open after yesterday's broad retreat, which was driven by disappointing post-earnings reactions to Alphabet and Tesla, renewed concerns surrounding the cost of the AI buildout, and another sharp rise in oil prices and Treasury yields.

Crude oil is modestly lower this morning despite a New York Times report that Iran rejected a ceasefire proposal presented by the Iraqi prime minister, keeping geopolitical risk in focus. Investors are also monitoring fresh tariff developments after reports that President Trump is looking to reimpose tariffs on roughly 60 trading partners, including the European Union.

There are plenty of earnings reports on this morning's calendar, though the slate lacks the same market-moving potential as yesterday's batch of mega-cap earnings.

In corporate news:

• American Express (AXP 325.73, -15.11, -4.4%) ) beats by $0.13, reports revs in-line; reaffirms FY26 EPS guidance, raises revenue growth guidance to 10%.
• Intel (INTC 103.85, +3.62, +3.6%) beat EPS expectations by $0.20, beats on revs, gross margin up 12.1 ppts; guides Q3 EPS above consensus, revs above consensus; Raises FY26 CapEx guidance to more than $20 bln from prior guidance of $18 bln; Also forecasting 2027 CapEx to be significantly above 2026 levels.
• Oracle (ORCL 122.80, +2.76, +2.3%) wins up to $6.99 bln DoW enterprise software IDIQ contract.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended the week on a lower note with South Korea's Kospi (-5.7%) facing renewed pressure after regulators announced that increased cash requirements for leveraged ETF purchases will come into effect sooner than originally planned. Japan's Nikkei: -2.7% Hong Kong's Hang Seng: -1.0%, China's Shanghai Composite: -1.6%, India's Sensex: -0.4%, South Korea's Kospi: -5.7%, Australia's ASX All Ordinaries: -0.9%.

In news:

• Meanwhile, South Korea's President Lee will be meeting with big tech CEOs in San Francisco today.
• Flash July PMI readings showed ongoing expansion in manufacturing and services sectors in Australia, Japan, and India.
• Japan is setting up a panel to manage the flow of foreign nationals into the country, fulfilling Prime Minister Takaichi's campaign pledge.

In economic data:

• Japan's June National CPI 0.3% m/m (last 0.4%); 1.7% yr/yr (last 1.5%). June National Core CPI 1.6% yr/yr, as expected (last 1.4%). Flash July Manufacturing PMI 54.7 (expected 55.0; last 54.8) and flash Services PMI 51.9 (last 52.2)
• Australia's flash July Manufacturing PMI 51.7 (last 51.5) and flash Services PMI 53.0 (last 50.5)
• Singapore's Q1 URA Property Index 0.5% qtr/qtr, as expected (last 0.9%)
• India's flash July Manufacturing PMI 53.9 (last 54.2) and flash Services PMI 53.1 (last 57.4)

Major European indices are looking for an upbeat finish to the week despite news that President Trump is looking to reimpose tariffs on 60 trading partners, including the EU. These tariffs will replace the 10% global tariff that is scheduled to expire. STOXX Europe 600: +0.4%, U.K.'s FTSE 100: +0.1%, France's CAC 40: +0.3%, Italy's FTSE MIB: +0.7%, Spain's IBEX 35: +0.8%.

In news:

• These tariffs will replace the 10% global tariff that is scheduled to expire. Economic data from the region was mostly surprising to the upside, with an improvement in PMI readings and the U.K. reporting strong Retail Sales growth for June (4.2%; expected 2.3%).
• European Central Bank policymaker Kocher said that second-round effects of inflation have not become apparent, but he is ready to vote for a September hike if needed.
• The ECB's latest Survey of Professional Forecasters showed no change in inflation expectations for 2026 and a ten-basis point uptick for 2027.
• GDP growth in 2026 is expected at 0.6%, down from the previous forecast for a 1.0% increase while the outlook for 2027 was trimmed to 1.2% from 1.3%.

In economic data:

• Eurozone's flash July Manufacturing PMI 52.0 (expected 51.5; last 51.4) and flash Services PMI 51.6 (expected 49.8; last 49.4)
• Germany's August GfK Consumer Climate -29.6 (expected -28.7; last -29.3). Flash July Manufacturing PMI 52.2 (expected 50.4; last 50.3) and flash Services PMI 49.6 (expected 49.0; last 48.6)
• U.K.'s July GfK Consumer Confidence -17 (expected -22; last -23). June Retail Sales 1.0% m/m (expected -0.3%; last 1.2%); 4.2% yr/yr (expected 2.3%; last 3.5%). June Core Retail Sales 1.1% m/m (expected -0.4%; last 1.2%); 5.4% yr/yr (expected 3.2%; last 4.9%). Flash July Manufacturing PMI 52.8 (expected 52.0; last 52.5) and flash Services PMI 51.8 (expected 49.4; last 48.8)
• France's flash July Manufacturing PMI 50.0 (expected 51.0; last 51.2) and flash Services PMI 49.8 (expected 47.5; last 46.8)

[BRIEFING.COM] The stock market ended sharply lower on Thursday as investors reassessed the cost of the AI arms race following earnings from Alphabet (GOOG 318.34, -23.57, -6.89%) and Tesla (TSLA 319.60, -54.41, -14.55%), while another surge in oil prices added to inflation concerns and pushed Treasury yields higher. The S&P 500 (-1.2%), Nasdaq Composite (-2.2%), and DJIA (-1.0%) all finished near their session lows, with growth stocks bearing the brunt of the selling pressure.

The market's largest technology companies led the retreat after Alphabet substantially increased its FY26 capital expenditure guidance, raising fresh questions about margins, free cash flow, and how quickly massive AI investments will generate meaningful returns. The announcement also reinforced the notion that other hyperscalers may have little choice but to continue raising AI spending to remain competitive, even as investors become increasingly focused on capital discipline. Tesla added to the cautious tone after pairing a disappointing earnings report with an even more aggressive investment outlook, reinforcing concerns that spending on AI and autonomous vehicle initiatives may continue to outpace near-term profitability.

The shift in sentiment weighed heavily on the market's largest growth stocks, with all seven "Magnificent Seven" components finishing lower and the Vanguard Mega Cap Growth ETF declining 2.4%. The communication services (-5.2%) and consumer discretionary (-5.1%) sectors finished as the weakest-performing sectors, reflecting the outsized declines in Alphabet and Tesla, as well as Amazon (AMZN 233.66, -11.19, -4.57%) and Meta Platforms (META 606.10, -21.07, -3.36%).

Technology shares were not universally weak, however. The information technology sector lost 1.1%, but companies tied to AI infrastructure spending continued to outperform their hyperscaler customers. The PHLX Semiconductor Index slipped just 0.5%.

The day's losses were compounded by another sharp advance in oil prices. Crude oil futures settled $5.24 higher (+6.0%) at $92.09 per barrel after reports of Houthi attacks on commercial shipping in the Red Sea intensified geopolitical concerns. The move extended crude's weekly gain to roughly 13%, lifted Treasury yields across the curve, and prompted investors to further price in the possibility of additional Federal Reserve tightening.

According to the CME FedWatch Tool, markets now assign a 35.8% probability of a rate hike at next week's FOMC meeting, up from 11.8% just one week ago. The probability for a September rate hike has increased to 80.1%.

Despite the sharp decline in the major averages, weakness remained significantly more concentrated among the market's largest companies. The S&P 500 Equal Weight Index fell just 0.4%, while the Russell 2000 (-0.7%) and S&P MidCap 400 (-0.4%) both outperformed.

Elsewhere, there were several pockets of strength. The industrials sector (+1.8%) led all sectors behind well-received earnings from United Rentals (URI 1139.71, +104.65, +10.11%), Lockheed Martin (LMT 568.59, +54.23, +10.54%), and Thermo Fisher (TMO 572.32, +45.86, +8.71%), while the energy sector (+0.6%) also finished higher as oil prices rallied.

The defensive healthcare (+1.3%) and utilities (+0.5%) sectors also outperformed, with Quest Diagnostics (DGX 227.90, +18.07, +8.61%) surging after a beat-and-raise report of its own.

Ultimately, today's action reflected a market increasingly focused on the economics of the AI buildout. While investors grew more cautious toward the hyperscalers funding those investments, companies tied to AI infrastructure spending generally proved more resilient, even as rising oil prices and higher Treasury yields created a more challenging backdrop for growth stocks as a whole. 

U.S. Treasuries continued this week's retreat, sending yields on the 10-year note and shorter tenors to their highest levels since early 2025 while the 30-year yield stopped just shy of its highest level since late 2007. The 2-year note yield settled up six basis points to 4.36%, and the 10-year note yield settled up five basis points to 4.70%. 

• Russell 2000: +18.5% YTD
• S&P Mid Cap 400: +14.0% YTD
• S&P 500: +8.2% YTD
• Nasdaq Composite: +8.2% YTD
• DJIA: +7.6% YTD

Reviewing today's data:

• Weekly Initial Claims 187K (Briefing.com consensus 214K); Prior was revised to 209K from 208K, Weekly Continuing Claims 1.796 mln; Prior was revised to 1.798 mln from 1.805 mln
  
  • The key takeaway from the report is that the low level of initial claims is a signpost of a labor market that continues to see low firing activity, which is a good sign for continued increases in consumer spending.