U.S. stock indexes traded mixed on Friday as investors weighed stronger economic data and hawkish Federal Reserve messaging against a bond-yield jump. The S&P 500 edged lower, the Dow Jones Industrials gained, and the Nasdaq 100 rose, while Apple shares fell sharply after results that disappointed on services and China revenue, pressuring technology sentiment.
Bond yields climbed after data pointed to firm domestic costs and activity, and commentary from Dallas Fed President Lorie Logan added to the rate pressure. Futures for September delivery were slightly lower to modestly higher, signaling investors were still calibrating the path for interest rates into the next leg of earnings.
Key takeaways
- Price move: The S&P 500 fell slightly while the Dow and Nasdaq 100 were higher.
- Catalyst: Better-than-expected U.S. economic reports and hawkish Fed comments pushed the 10-year Treasury yield to a 1.5-year high.
- Company impact: Apple dropped after reporting weaker-than-expected services and China-related revenue and a soft revenue forecast, offsetting strength in parts of the AI and chip supply chain.
- Market implication: Rate volatility remained the dominant cross-asset driver, with investors also focused on megacap earnings updates later this week.
What drove the move
Markets initially held gains before turning mixed as bond yields rose. According to the trading session, the 10-year Treasury yield jumped to a 1.5-year high around 4.74%, reflecting renewed sensitivity to the rate outlook.
Several U.S. data points landed firmer than expected. The Q2 employment cost index rose to 0.9% versus an expected 0.8%, and the July Chicago PMI increased by 0.9 to 57.6 after expectations pointed to a decline. In addition, the University of Michigan’s July consumer sentiment index was revised upward to 55.2, higher than the market’s expected revision to 54.0.
Fed communication reinforced the higher-yield environment. The Dallas Fed president said that, without policy restraint, inflation is likely to remain above target until an unanticipated shock occurs, and that modest action in the near term could reduce the probability of needing sharper measures later.
Outside the U.S., softer Chinese manufacturing and non-manufacturing PMI readings weighed on growth expectations. Data showed the July manufacturing PMI fell by 1.1 to 49.2, below expectations and at a five-month low, while the July non-manufacturing PMI fell by 1.2 to 49.0 and was reported as the weakest in 3.5 years.
Market reaction across stocks, rates, and sectors
Despite the rate headwind, early momentum in chips and AI-related names supported the broader tape. The Philadelphia Stock Exchange Semiconductor Index rose more than 1%, with companies including Marvell Technology and other semiconductor and AI-infrastructure names extending gains.
Amazon.com helped support sentiment as well, rising more than 14% after reporting that Amazon Web Services net sales exceeded expectations. The move was attributed to accelerating cloud growth and investors’ confidence that planned capital spending would translate into returns as AI infrastructure buildouts continue.
Apple, however, dragged on technology. The stock fell more than 9% after reporting disappointing services revenue and weaker revenue tied to China, alongside a revenue forecast that came in below expectations. The drop weighed on broader tech leadership even as other megacap results offered support.
In rates, Treasury price weakness mirrored the equity selloff risk. Trading showed the 10-year note yield was higher on the day, with market participants pointing to the stronger economic readings and additional pressure from the hawkish Fed remarks. European government bond yields also moved higher, with the German bund and the UK gilt both rising toward session highs. Separately, France CPI and German labor-market data added to the inflation and growth read-through.
Energy also played a role in the cross-asset picture. West Texas Intermediate crude rose more than 2% even without reported fresh U.S.-Iran direct attacks overnight. However, Middle East risk remained elevated, with statements from a Houthi leader indicating potential escalation and with ongoing maritime restrictions and shipping exposure in the region.
Megacap earnings focus and notable movers
Investors continued to look ahead to a busy earnings week for large technology companies. According to compiled expectations cited in the report, analysts projected second-quarter earnings growth of about 23%, near the pace of a strong first-quarter showing. The outlook emphasized AI-related spending as a key contributor to earnings growth, with AI infrastructure stocks expected to play a large role in aggregate S&P 500 earnings-per-share improvements.
Trading action reflected that earnings sensitivity remains high. Shares of Monolithic Power Systems rose more than 10% after reporting Q2 revenue above consensus and issuing a stronger-than-expected third-quarter revenue forecast. Dexcom gained more than 9% after topping expectations on revenue and raising its full-year revenue forecast. Eaton advanced after reporting higher organic sales growth that exceeded expectations, while Weyerhaeuser rose after beating on net sales.
On the other side of the ledger, several companies fell after results or operational metrics missed expectations. Roblox dropped sharply after reporting Q2 daily active users below consensus, and Reddit fell after reporting U.S. daily active users below expectations. GoDaddy declined following weaker-than-expected total bookings, while Stryker and AutoNation moved lower after sales or revenue readings were slightly below analyst expectations.
Crypto-exposed equities also softened. Bitcoin was reported down more than 3% to a 2.5-week low, and related stocks—such as Coinbase, Strategy, and Circle—fell after company disclosures and broader market weakness tied to the move in digital assets.
What analysts and investors are watching next
With bond yields driving day-to-day direction, investors are likely to stay focused on inflation and labor-cost momentum as they evaluate the Fed’s tightening stance. The next test for equities comes as more megacap results land, including Microsoft and Meta Platforms later in the week, followed by Amazon.com and Apple. At the same time, traders will continue to monitor upcoming central-bank events and macro data—particularly as markets are pricing in the likelihood of further policy tightening into the next FOMC meeting.
