Stocks Turn Mixed as Bond Yields Jump

The S&P 500 Index ($SPX) (SPY) today is down -0.02%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.24%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.17%.  September E-mini S&P futures (ESU26) are down -0.02%, and September E-mini Nasdaq futures (NQU26) are up +0.05%.

Stocks gave up an early advance today and are trading mixed after better-than-expected US economic news and hawkish Fed comments pushed bond yields higher.  The 10-year T-note yield jumped to a 1.5-year high of 4.74% today.  Also, today’s -9% plunge in Apple is weighing on technology stocks after reporting disappointing service revenue and revenue from China.  It also gave a weaker-than-expected revenue forecast.

Stock indexes initially moved higher today, with the S&P 500 and Nasdaq 100 posting 1-week highs on strength in chipmakers.  Stocks also found support after Amazon.com surged more than 14% to bolster market sentiment, as its cloud unit recorded the fastest quarterly revenue growth in 5 years, reassuring investors that its projected increase in capital spending will generate sufficient returns and that the global AI buildout will be sustained. 

Today’s US economic news was stronger than expected, pushing up bond yields and weighing on stocks.  The US Q2 employment cost index rose +0.9%, stronger than expectations of +0.8%.  Also, the July MNI Chicago PMI unexpectedly rose +0.9 to 57.6, stronger than expectations of a decline to 56.0.  In addition, the University of Michigan US July consumer sentiment index was unexpectedly revised upward to a 5-month high of 55.2, stronger than expectations of a downward revision to 54.0.

Hawkish comments today from Dallas Fed President Lorie Logan pushed bond yields higher and weighed on stocks when she said, "Without any policy restraint, inflation will likely continue to trend above target until there's an unanticipated shock.  Modest action in the near term would reduce the likelihood of needing to take sharper action later."

Weaker-than-expected Chinese economic news was negative for global growth prospects after the China July manufacturing PMI fell -1.1 to 49.2, weaker than expectations of 50.1 and a 5-month low.  Also, the July non-manufacturing PMI fell -1.2 to 49.0, weaker than expectations of 49.0 and the weakest level in 3.5 years.

Sep WTI crude oil prices (CLU26) are up more than +2% today even after there were no fresh attacks by the US and Iran against each other overnight.  However, Houthi leader Abdulmalik al-Houthi said today that there were indications the Saudis were heading toward "comprehensive escalation," which he said would be met with a fiercer campaign. 

Tensions remain high in the Middle East.  In addition to the Houthi attempt to blockade Saudi ports in the Red Sea, the US is maintaining a full maritime blockade of vessels calling at Iranian ports.  Also, Iran continues to menace shipping transiting the Strait of Hormuz.  In addition, diplomatic attempts to reopen the Strait of Hormuz appear to be at an impasse. 

The outlook for strong Q2 earnings, which continue this week, is a bullish factor for stocks.  The markets are awaiting results from a raft of megacap technology companies this week, including Microsoft and Meta Platforms today, and Amazon.com and Apple on Thursday.  Forecasts compiled by Bloomberg Intelligence suggest Q2 earnings may increase by +23%, close to Q1’s blowout earnings of +30%, which was more than double the +12% analysts had expected.  AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2. So far, earnings results have been positive, with 86% of the 291 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. 

The markets are discounting a 68% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.

Overseas stock markets are higher today.  The Euro Stoxx 50 climbed to a 3.5-week high and is up +0.32%. China's Shanghai Composite closed up +0.72%.  Japan's Nikkei-225 Stock Average closed up sharply by +4.03%.

Interest Rates

September 10-year T-notes (ZNU6) today are down -15 ticks.  The 10-year T-note yield is up +5.5 bp to 4.729%.  Sep T-notes fell to a 1-week low today, and the 10-year T-note yield rose to a 1.5-year high of 4.735%.  T-notes are under pressure today amid stronger-than-expected US economic reports including the Q2 employment cost index, the Jul MNI Chicago PMI, and the University of Michigan US Jul consumer sentiment index.  Also, today’s +2% increase in WTI crude oil prices is raising inflation expectations, a bearish factor for T-notes.  T-notes added to their losses after Dallas Fed President Lorie Logan said she favors tighter Fed policy to curb inflation. 

European government bond yields are moving higher today.  The 10-year German bund yield rose to a 1-week high of 3.203% and is up +4.2 bp to 3.197%.  The 10-year UK gilt yield is up +5.7 bp to 5.041%.

France Jul CPI rose +0.6% m/m and +2.1% y/y, stronger than expectations of +0.3% m/m and +1.8% y/y.

German Jul unemployment rose +6,000, showing a weaker labor market than expectations of +5,000.  The Jul unemployment rate unexpectedly rose +0.1 to 6.4%, showing a weaker labor market than expectations of no change at 6.3%.

The markets are discounting an 89% chance of a +25 bp ECB rate hike at their next policy meeting on September 10.

US Stock Movers

Chipmakers and AI-infrastructure stocks are extending Thursday’s sharp gains today following plans from hyperscalers to continue ramping up AI infrastructure.  The Philadelphia Stock Exchange Semiconductor Index ($SOX) is up more than +1%.  Marvell Technology (MRVL) is up more than +5%, and Western Digital (WDC), Nebius Group NV (NBIS), and KLA Corp (KLAC) are up more than +3%.  Also, Applied Materials (AMAT) and Intel (INTC) are up more than +2%.

Cryptocurrency-exposed stocks are under pressure today with Bitcoin (^BTCUSD) down more than -3% at a 2.5-week low.  Coinbase Global (COIN) is down more than -14% after reporting Q2 total revenue of $1.22 billion, weaker than the consensus of $1.29 billion.  Also, Strategy (MSTR) and Circle Internet Group (CRCL) are down more than -7%, and Riot Platforms (RIOT) is down more than -4%.  In addition, MARA Holdings (MARA) and Galaxy Digital Holdings (GLXY) are down more than -2%.

Amazon.com (AMZN) is up more than +14% to lead gainers in the S&P 500, Nasdaq 100, and Dow Jones Industrials after reporting Amazon Web Services net sales of $42.23 billion, stronger than the consensus of $40.57 billion. 

Monolithic Power Systems (MPWR) is up more than +10% after reporting Q2 revenue of $980.6 million, well above the consensus of $903.3 million, and forecasting Q3 revenue of $1.14 billion to $1.16 billion, stronger than the consensus of $986.4 million. 

Dexcom (DXCM) is up more than +9% after reporting Q2 revenue of $1.31 billion, better than the consensus of $1.29 billion, and raising its full-year revenue forecast to $5.18 billion to $5.25 billion from a previous forecast of $5.16 billion to $5.25 billion. 

Weyerhaeuser (WY) is up more than +4% after reporting Q2 net sales of $1.87 billion, better than the consensus of $1.82 billion. 

Eaton Corp Plc (ETN) is up more than +3% after reporting Q2 organic sales rose +14%, stronger than the consensus of +9.72%.

Roblox (RBLX) is down more than -29% after reporting Q2 daily active users of 123 million, well below the consensus of 128.71 million.

Reddit (RDDT) is down more than -22% after reporting Q2 US daily active users of 53.2 million, below the consensus of 54 million. 

GoDaddy (GDDY) is down more than -20% to lead losers in the S&P 500 after reporting Q2 total bookings of $1.42 billion, below the consensus of $1.43 billion. 

Apple (AAPL) is down more than -9% to lead losers in the Dow Jones Industrials and Nasdaq 100 after reporting Q3 service revenue of $30.74 billion, weaker than the consensus of $31.36 billion, and Q3 Greater China revenue of $18.82 billion, below the consensus of $19.58 billion.

Stryker (SYK) is down more than -7% after reporting Q2 organic revenue growth of 9.00%, weaker than the consensus of 9.04%. 

AutoNation (AN) is down more than -4% after reporting Q2 revenue of $6.93 billion, below the consensus of $6.98 billion. 

Earnings Reports (7/31/2026)

AbbVie Inc (ABBV), AES Corp/The (AES), Ares Management Corp (ARES), Cboe Global Markets Inc (CBOE), Chevron Corp (CVX), Church & Dwight Co Inc (CHD), Colgate-Palmolive Co (CL), Dominion Energy Inc (D), Eaton Corp PLC (ETN), ExxonMobil Holdings Corp (XOM), Federal Realty Investment Trust (FRT), Franklin Resources Inc (BEN), Linde PLC (LIN), LyondellBasell Industries NV (LYB), Moderna Inc (MRNA), T Rowe Price Group Inc (TROW).