The stock market endured another volatile week, yet the S&P 500 demonstrated impressive resilience, briefly eclipsing the 7,500 level on Friday before settling just below that mark. Investors navigated a busy week highlighted by the FOMC meeting, a flood of earnings reports, sharp swings in oil prices and Treasury yields, and renewed volatility across semiconductor stocks.
Although the Federal Reserve left the target range for the fed funds rate unchanged at 3.50%-3.75%, three dissents favoring a rate hike and Fed Chair Kevin Warsh's inflation-focused remarks tempered the market's initial relief rally. Meanwhile, the 10-year Treasury yield climbed from 4.60% early in the week to 4.75% on Friday as oil prices rebounded and inflation concerns persisted. WTI crude oil ultimately settled at $84.57 per barrel, gaining 21% during July.
Corporate earnings ultimately dictated market leadership. Semiconductor stocks remained under heavy pressure early in the week as investors questioned AI infrastructure spending and memory demand, but sentiment shifted dramatically after Microsoft's blowout results and optimistic outlook reignited enthusiasm for the AI trade. That reversal was aided by reports that hedge fund Situational Awareness had liquidated its public equity portfolio following steep losses in AI-related investments, a development many investors viewed as a clearing event after weeks of deteriorating sentiment.
The recovery gained further traction Friday when Amazon delivered another standout quarter, reinforcing confidence in AI-driven infrastructure spending and helping investors look past Apple's disappointing fiscal Q4 revenue guidance. Amazon's 15% surge, together with strong gains in Alphabet, Microsoft, and NVIDIA, carried the major indices higher despite rising Treasury yields, firmer oil prices, and only modestly positive market breadth.
Riding Amazon's gain on Friday, the consumer discretionary sector finished the week up 8.3%, leaving it at the top of the performance rankings. Next in line was communication services (+5.4%), consumer staples (+1.2%), and financials (+1.1%). Utilities (-4.2%) was the worst-performing sector.
On the economic front, second-quarter GDP growth slowed to 1.5%, but consumer spending remained resilient, initial jobless claims stayed below 200,000, and June PCE inflation moderated on a year-over-year basis. Even so, inflation remains well above the Federal Reserve's 2.0% target, leaving investors focused on the likelihood that monetary policy could remain restrictive for some time.
Nasdaq Composite: +1.6% week-to-date
S&P 500: +1.1% week-to-date
DJIA: +1.0% week-to-date
Russell 2000: +0.1% week-to-date
S&P Mid Cap 400: -0.7% week-to-date