NEW YORK, August 1, 2026, 05:38 EDT — The U.S. stock market closed for the week.
- Last week, the S&P 500 advanced 1.1%. The Nasdaq climbed 1.6%, and the Russell 2000 finished little changed.
- Microsoft NASDAQ:MSFT and Amazon.com NASDAQ:AMZN jumped following their earnings results. Apple NASDAQ:AAPL declined by 7.4%, and Meta Platforms NASDAQ:META dropped after reporting weak cash conversion.
- July’s payroll numbers are set for release on August 7. Projections by economists anticipate 83,000 jobs added with an unemployment rate of 4.3%.
Wall Street advanced last week, yet the market rally heightened scrutiny of AI investments. Investors favored strong cloud earnings, while companies with poor cash conversion faced selling pressure.
The S&P 500 advanced 1.1%, and the Nasdaq climbed 1.6%. The Russell 2000 was little changed, indicating minimal impact on smaller stocks.
Friday highlighted the limited breadth in the market. The number of stocks falling exceeded those rising by a ratio of 1.3-to-1, despite gains in both major indexes. Trading volume totaled 20.6 billion shares, surpassing the 20-day moving average of 17.1 billion.
The weekly scorecard indicates large-cap strength while small-caps remain cautious.
| Index | Friday close | Friday | Week | 2026 YTD |
|---|---|---|---|---|
| S&P 500 | 7,489.72 | up 0.7% | gained 1.1% | advanced 9.4% |
| Nasdaq Composite | 25,373.85 | rose 1.0% | added 1.6% | up 9.2% |
| Dow Jones Industrial Average | 52,485.03 | climbed 0.5% | increased 1.0% | higher by 9.2% |
| Russell 2000 | 2,931.34 | fell 0.5% | edged up less than 0.1% | gained 18.1% |
The path was bumpier than the outcome. Losses from Wednesday’s Fed-driven selloff were wiped out over the following two sessions.
| Session | S&P 500 move | Main driver |
|---|---|---|
| Monday, July 27 | +0.02% | Market participants awaited key tech company reports |
| Tuesday, July 28 | +0.21% | Gains in value stocks contrasted with weaker chipmakers |
| Wednesday, July 29 | -1.52% | Fed paused, with three officials objecting on hawkish grounds |
| Thursday, July 30 | +1.66% | Microsoft’s performance fueled a recovery in AI and chip stocks |
| Friday, July 31 | +0.70% | Amazon’s rally more than offset Apple’s drop |
This week’s earnings breakdown delivered the most definitive indication yet. Rapid expansion was not adequate by itself. Investors sought concrete evidence that AI investments translated into revenue, margins, or cash flow.
Microsoft reported quarterly capital expenditures of $41 billion and generated $19.6 billion in free cash flow. Amazon’s AWS unit posted 37% revenue growth and an estimated operating margin close to 39%. Meta’s free cash flow dropped by 91% to $784 million. Apple’s revenue rose 16%, but outlook was tempered by ongoing supply constraints.
| Company | Post-report reaction | Reported evidence | Investor verdict |
|---|---|---|---|
| Microsoft | Climbed over +15% Thursday | Cloud revenue up 27%; free cash flow $19.6 billion | Major investments were covered by cash generation |
| Amazon | Gained more than +15% Friday | AWS revenue increased 37%; AWS operating margin close to 39% | Momentum in cloud offset worries about cash flow |
| Meta Platforms | Dropped following the release | Revenue rose 28%; free cash flow $0.8 billion | Expenditure surpassed immediate cash creation |
| Apple | Down 7.4% Friday | Revenue up 16%; supply limitations noted | Solid performance did not clarify the forward view |
Positive free cash flow was not the sole criteria. Amazon posted a $7.6 billion outflow over the trailing 12 months, mainly due to spending on AI. A surge in AWS growth shifted the market’s perspective.
“These are definitely battleground stocks,” said Jed Ellerbroek, portfolio manager at Argent Capital Management. Jake Dollarhide, CEO of Longbow Asset Management, said Amazon’s results “put overspending fears to bed.” Reuters
The Federal Reserve introduced an additional filter, focusing on funding costs. Policymakers kept rates steady at 3.50%-3.75%, with the decision passing by a 9-3 margin. Three members advocated raising rates by a quarter point.
Treasury yields continued to reflect that strain. The two-year yield finished Friday at 4.28%. The 10-year yield settled at 4.75%, and the 30-year was at 5.27%. Markets factored in a 65% chance of a rate hike in September.
Valuations offer little margin for error. The S&P 500 is currently valued at close to 20 times projected earnings, compared to a 10-year average of roughly 19 times.
Focus moves to employment data next week as over a quarter of S&P 500 components prepare to release results.
| Date | Event | Market relevance |
|---|---|---|
| Monday, August 3 | Palantir Technologies NASDAQ:PLTR announces results post-market | Measures investor appetite for AI software premiums |
| Tuesday, August 4 | June JOLTS released at 10:00 EDT | Provides early read on labor market demand |
| Tuesday, August 4 | Advanced Micro Devices NASDAQ:AMD releases earnings after market close | Indicator for interest in non-traditional AI processors |
| Wednesday, August 5 | Eli Lilly NYSE:LLY earnings with call at 10:00 EDT | Significant impact within healthcare sector results |
| Thursday, August 6 | Q2 preliminary productivity data out at 08:30 EDT | Key for wage and inflation outlook |
| Friday, August 7 | July payroll report at 08:30 EDT | Forecast shows 83,000 job gain, 4.3% jobless rate |
Federal and corporate statements have verified the calendar and corporate dates.
The upcoming jobs report will indicate if the recovery is expanding. A modest and steady result may lower yields while avoiding renewed recession worries. A robust figure could increase expectations for rate hikes and weigh on long-duration valuations.
Risks are still clustered. An oil price increase, unexpected payroll data or another disappointing AI cash-flow report could push yields up and undo the limited rally.
Monitor breadth. The rally’s strength will appear more sustainable once small caps and overall market participation start to support it.
Related articles: NASDAQ:MSFT
TS2 TECH • U.S. MARKET
US Stock Market Forecast: Week Ahead
Last updated August 1, 2026 • 05:36 ET / 11:36 CEST • U.S. markets are closed
Wall Street moves into August showing a modest positive trend, but stops short of a decisive surge higher. The S&P 500 rose 1.0% over the past week, ending the period 1.6% under its June 2 all-time high. The Nasdaq advanced 1.6%, as small cap stocks remained mostly unchanged.
Neutral to positive
Ideally, hiring remains steady and wage increases stay limited. Strong jobs data may push Treasury yields and rate-hike expectations higher. A significant disappointment could fuel worries about economic growth.
The recovery remains limited in scope
Friday highlighted underlying tension. The S&P 500 climbed 0.7%, yet losing stocks surpassed gainers by 1.3 to 1. A handful of major firms powered the index higher. July ended with the Nasdaq falling 3.2%.
The S&P 500 is still near levels that could prompt another test, though broader market participation is needed.
Projected earnings stand at about 19 times the 10-year average.
S&P 500 earnings growth after adjustments, covering both reported figures and latest projections.
Friday’s session ended with higher yields continuing to weigh on equity multiples.
Probability of a 25 basis point hike by the Federal Reserve as priced in by the market.
The index slid 6.44% on Friday, even as several individual stocks posted significant swings.
The central bank left rates unchanged with a 9–3 vote, as three members called for an immediate quarter-point hike.
Inflation is still higher than the 2% target, making robust labour numbers more difficult for equities to digest.
Leadership division persists
Small caps remain ahead in 2026, yet they missed last week’s rally. The divergence is notable. Sustained gains typically require participation beyond megacaps.
Returns from the beginning of the year up to July 31, 2026. Bar scale ranges from 0% to 20%.
Coming up: August 3–7
The jobs report is the primary focus. Over one in four S&P 500 companies are scheduled to announce results, maintaining elevated single-stock volatility.
ISM manufacturing: Expected at 54.0, compared with 53.3 in June.
After markets shut: Palantir (NASDAQ:PLTR).
Trade deficit: Forecast at $73.0 billion, compared to $77.6 billion.
Job openings: Forecast at 7.5 million, compared to 7.6 million.
Results: Merck (NYSE:MRK), Caterpillar (NYSE:CAT), AMD (NASDAQ:AMD) and SpaceX (NASDAQ:SPCX).
ADP jobs: Forecast stands at 75,000, compared with 98,000.
ISM services: Forecast at 54.4, compared to 54.0 previously.
Results: Eli Lilly (NYSE:LLY) reported earnings.
Initial claims: Forecast was 200,000; actual result was 197,000.
Q2 productivity: Expectations were for 0.7%, compared with 0.3%.
Nonfarm payrolls: Forecast at 83,000, compared to 57,000 in June.
Unemployment: Expected at 4.3%, compared to 4.2%.
The wage data could prove just as significant as the overall jobs number.
Three possible market directions
Payrolls come in around 83,000, with unemployment remaining near 4.3% and Treasury yields slipping from 4.745%. Major companies post strong earnings, supporting the current earnings narrative. The S&P 500 now needs to climb just 1.6% to recover.
Index gains are underpinned by profit growth, yet a 20-times multiple and 67% chance of a rate hike curb further upside. Major growth stocks are at the forefront, while broader market participation stays uneven.
If hiring or wages heat up, oil prices remain high and the 10-year yield climbs, markets may face added strain. A disappointing earnings result from a leading AI or industrial firm could intensify selling, and last week’s gains could be erased.
Risks involved
WTI crude settled at $84.67 on Friday, while Brent ended at $90.12. Fresh tensions between the US and Iran could push energy prices higher and increase inflation forecasts. Rising bond yields may heighten valuation pressures, while a dense earnings calendar adds to gap risk among the biggest index components.
Perspective from investors
The 1.0% weekly rise should not be taken as widespread confirmation. A clearer indication will come next week if yields drop and participation increases. Absent both, any attempt at a record high could stay vulnerable.
