Better-than-expected earnings reports from Microsoft and Amazon during the later part of the trading week helped shift the U.S. equity market away from what had looked like another leg of the sell-off cycle that had rattled global markets for a couple of weeks: New York sold off, Seoul sold off harder, and the renewed concerns spilled back into U.S. markets.
The Dow closed at 52,485 on July 31, up 1.04 percent for the week. The S&P 500 rose 1.05 percent to close at 7,489. The Nasdaq, which had been deep in negative territory as recently as the afternoon of July 29, ended the week up 1.59 percent. The small-cap Russell 2000 finished the week little changed, up 0.16 percent, while the CBOE Volatility Index plunged 13.94 percent to settle at 15.99—a sign that the panic has eased.
Following a sharp rebound at the market open on July 27, fueled by bargain hunting in technology stocks and a retreat in both crude oil and bond yields, markets began to slide late that morning, again led by technology shares, as investors refocused on the same concerns that had weighed on the sector for weeks: ballooning artificial intelligence (AI) capex, circular financing arrangements between AI companies, and intensifying competition from Chinese chipmakers.
July 28 brought fresh selling from Seoul, where the Kospi plunged 10 percent in another blow to South Korea’s tech-heavy market and extending the global selloff. Wall Street initially followed suit, but a rally in software stocks lifted the Nasdaq off its lows by midday, trimming its loss for the day to 0.22 percent. The Dow, meanwhile, rose 1.03 percent as oil and yields retreated amid an uneasy Middle East truce.
Strong earnings from Boeing and Coca-Cola, whose shares surged 4.76 percent and 5 percent, respectively, also helped fuel a rotation out of technology stocks and into more traditional sectors.
“While stocks are on track for modest gains during July, August is known for its volatility, and we have seen a fair share of market corrections over the years take place during August,” Rick Gardner, chief investment officer at Raleigh, North Carolina-based RGA Investments, told The Epoch Times.
By July 29, the Kospi slide entered its second day—down another 8 percent—after SK Hynix posted strong earnings that nonetheless failed to meet Wall Street’s inflated expectations for the memory chip sector. The selling spread to the broader U.S. market as oil prices and bond yields snapped back on renewed Middle East tensions, and as investors grew increasingly anxious ahead of the Federal Reserve’s afternoon policy statement.
“Wednesday is Chair [Kevin] Warsh’s second FOMC meeting and press conference, and investors will still be trying to get accustomed to his tone and style. It can take a few meetings for markets to become comfortable with a new Federal Reserve chair,” Paul Stanley, managing director and founding advisor at Arca, a New York-based wealth management firm, told The Epoch Times.
Policymakers left interest rates unchanged after the meeting, while Warsh offered few clues about the direction of monetary policy.
“With oil prices see-sawing, inflation data more subdued, and employment hanging tough, doing nothing was the best course of action. That doesn’t mean that a rate hike is off the table in September. The answer to that will be in the data over the next two months,” Melissa Cohn, regional vice president of William Raveis Mortgage, told The Epoch Times.
Cohn added that the new Federal Reserve chief has little room to maneuver so early in his tenure.
“It will be very difficult for Warsh to either hike or cut rates so early in his term as chair. If he did, it could undermine the outcomes of his new task forces and require him to manage a hike with the Trump administration. It’s simply too soon.”
David Russell, head of market strategy at TradeStation, said a hike is closer than the market thinks.
“Hikes are coming into focus as inflation runs ahead of the Fed’s target. Policymakers are getting more hawkish and putting September into play for a tightening move,” he told The Epoch Times.
“It all comes down to energy. Given the situation in the Middle East, oil prices are in the driver’s seat, and the Fed is going along for the ride.”
The 10-year Treasury yield climbed to 4.66 percent after the central bank’s rate decision, nearing multi-week highs, and equities sold off across the board.
However, Microsoft’s fourth-quarter fiscal year 2026 earnings report, released after markets closed on July 29, shifted the market sentiment.
The company’s results showed strength across the board, led by its Azure cloud platform. The strong performance suggested that the company’s heavy investment in AI infrastructure is beginning to generate returns, easing some investor concerns over rising capital expenditures.
Microsoft’s shares rose 15.51 percent on July 30, boosting the Nasdaq. The S&P 500 and Dow also rallied.
Meanwhile, Samsung Electronics also reported strong earnings, supporting gains in memory chip stocks.
Amazon helped extend the rally into July 31 after reporting strong revenue and earnings, which reinforced the emerging narrative that Big Tech’s AI bet is starting to deliver returns.
Stocks opened and closed higher across most major indexes despite some profit-taking late in the morning. Small-cap stocks were the only segment to post losses, pressured by higher bond yields.
Despite the rebound, strategists say the underlying tension between a hawkish bond market and an untested Fed chair is far from over.
“The stock market is undergoing a repricing as the bond market is sending a clear message that rates are going higher. Higher rates generally make stocks less attractive,” Richard Reyle, chief investment officer at Paramus, New Jersey-based Questar Capital Partners, told The Epoch Times.
Reyle believes the market hasn’t adjusted yet to a new voice at the Federal Reserve.
“The market has always tried to take its cues from the Fed, even when the Fed has gotten it wrong on rates, and now the market is being asked to be the Fed chair. This is a conundrum that may take time to play out.”
Still, he sees an encouraging sign beneath the week’s technology stock-driven headlines: a market that is no longer leaning on a handful of AI giants alone.
“While much of the focus is about big tech and AI, the S&P 500 is holding up nicely, thanks to some power from other sectors of the market like biotech and financials. This is prime evidence that the broadening story in the market is alive and well,” Reyle said.
