NEW YORK, July 25, 2026, 06:00 EDT (10:00 GMT)
- The S&P 500 dropped 0.6% last week to finish at 7,411.98, while the Nasdaq slipped 2.1%, marking its second consecutive weekly loss Yahoo Finance
- Alphabet, Tesla and Intel surpassed revenue forecasts but dropped 7.1%, 14.5%, and 7.9% respectively; the Magnificent Seven lost $787 billion in a single session
- The Federal Reserve announces its rates decision on Wednesday, with futures indicating a 38% probability of an increase; Microsoft, Amazon, and Meta are set to release earnings Euronext
Wall Street ended last week with investors selling on positive news. The S&P 500 lost 0.6% to finish at 7,411.98. The Nasdaq Composite shed 2.1% to close at 24,975.82. Both benchmarks recorded a second straight weekly decline. U.S. markets are closed for the weekend. Yakima Herald
The notable aspect was which companies took the biggest hit. Alphabet NASDAQ:GOOGL, Tesla NASDAQ:TSLA, and Intel NASDAQ:INTC each surpassed revenue expectations. Still, shares of all three declined.
This response signals a change in what investors are willing to value. As of Wednesday, over 80 companies had reported, with S&P 500 second-quarter earnings tracking 26.5% higher compared to the same period last year, LSEG IBES data showed. The result is an early blended projection and will be updated as additional companies release their figures. Such robust growth had already been factored into prices.
Cash has become the market’s key measure. Companies spending more on capital than they generated in operating cash were hit, regardless of beating analyst forecasts. Both Alphabet and Tesla posted negative free cash flow for the quarter. That turns attention to next week, when Microsoft NASDAQ:MSFT, Amazon NASDAQ:AMZN and Meta Platforms NASDAQ:META—large AI-focused companies—report results. CNBC
Alphabet increased its 2026 capital expenditure projection to a range of $195 billion to $205 billion, up from its previous estimate of $180 billion to $190 billion, and noted that the figure could rise again next year. Google Cloud revenue surged 82% to $24.8 billion, surpassing analyst expectations. Despite this, Alphabet shares dropped 7.1% on Thursday, wiping out about $300 billion in market capitalisation.
Tesla’s performance lagged. Shares dropped 14.5%, marking the largest decline since March 2025. Capital expenditures for the quarter jumped 142% to $5.79 billion. Chief Executive Elon Musk justified the spending during the earnings call, stating, “maybe the best capex returns that we’ve ever seen.” CNBC + 2
Some investors held their positions. Janus Henderson portfolio manager Alison Porter described it as one of Alphabet’s strongest revenue quarters in five years, adding “Alphabet is a really great barometer for this whole AI wave.” According to Edward Jones analyst Brian Therien, the improved outlook indicates that the AI buildout is still resilient. AOLFox Business
The tape showed otherwise, at least for now. The Magnificent Seven saw $787 billion in market value wiped out on Thursday, marking the group’s largest single-day loss in over a year. Amazon dropped 4.6%, despite not releasing any earnings. Fox Business
Intel set a clear trend. Revenue jumped 25% to $16.1 billion, marking the highest growth rate since 2011 and surpassing the consensus forecast of $14.42 billion. Adjusted earnings at 42 cents more than doubled projections, and third-quarter guidance exceeded expectations. Shares rose in after-hours trading. Shares then dropped almost 8% on Friday as investors responded to plans to boost 2026 capital spending above $20 billion, up from the current level of about $18 billion. Finance chief Dave Zinsner said “we are meaningfully increasing our investments in equipment, clean room space, and substrates.” CNBC + 4
| Company | Q2 vs. estimates | Spending signal | Stock reaction |
|---|---|---|---|
| Alphabet NASDAQ:GOOGL | Revenue topped forecasts; Cloud up 82% | Capex target for 2026 increased to $195–205 billion | Down 7.1% Thursday |
| Tesla NASDAQ:TSLA | Revenue beat; EPS shortfall | Q2 capex up 142%; 2026 spend over $25 billion | Shares fell 14.5% Thursday |
| Intel NASDAQ:INTC | Revenue $16.1 bln, topping $14.4 bln expectations | 2026 capex boosts above $20 billion | Fell 7.9% Friday |
Funds moved within the market instead of exiting. The Dow Jones Industrial Average slipped 0.4% over the week but gained 0.5% on Friday, driven by Salesforce NYSE:CRM with a 4.1% rise, IBM NYSE:IBM up 3.6%, and Apple NASDAQ:AAPL climbing 3.5%. Companies with strong cash positions outperformed, while those with higher capital expenditures lagged. The Nasdaq 100 posted its first consecutive weekly decline since late March.
| Index | Close July 24 | Week | 2026 to date |
|---|---|---|---|
| S&P 500 | 7,411.98 | down 0.6% | up 8.3% |
| Dow Jones Industrial Average | 51,947.25 | off 0.4% | gained 8.1% |
| Nasdaq Composite | 24,975.82 | fell 2.1% | up 7.5% |
| Russell 2000 | 2,930.00 | declined 1.1% | advanced 18.1% |
Small-cap stocks maintain a significant lead so far this year. This wide gap highlights that the rally is no longer confined to mega-cap tech names.
Oil prices added to volatility. Brent crude climbed as high as $102 per barrel on Thursday before dropping 4% to $96.78 on Friday. Despite the decline, crude remained substantially up for the week as U.S.-Iran strikes hampered tanker movement through the Persian Gulf and Red Sea. Washington announced fresh global tariffs but excluded some energy products, and S&P Global’s flash PMI pointed to the fastest pace of business activity growth in eight months, supported by the World Cup.
The Federal Reserve will weigh that combination when it meets on Tuesday and Wednesday. According to CME’s FedWatch tool, futures put the chance of a rate increase at the July 29 meeting at 38%, rising from 12% the previous week. FactSet’s economist survey still predicts a fifth consecutive pause, keeping rates between 3.50% and 3.75%. New Chair Kevin Warsh has committed to providing less forward guidance, which has left markets without firm direction. BNP Paribas economists stated, “The possibility of a shock rate hike cannot be ruled out entirely.” IndexBox + 3
Earnings season reaches its height simultaneously. Amazon has already projected over $200 billion in capex, a figure that may increase when the company releases its results. Man Group’s Hooper noted that hyperscalers might hit expectations and offer positive guidance but could still face selloffs if investor sentiment around AI expenditures shifts. CNBC
The dangers are evident. An oil surge past $100 could prompt renewed expectations of rate hikes. An unexpected action from the Fed, or a hawkish signal from Warsh at a press conference, could pressure long-duration tech stocks the most. Further capital expenditure hikes by Microsoft, Meta or Amazon might prolong the sell-off. Additionally, the 26.5% earnings-growth estimate is an early figure and will be updated as more companies release results.
The standard for AI investments has shifted. Growth remains important. Cash now leads decision-making.
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