MARKET ANALYSIS
The July Damage Remains

Amazon’s cloud results have restored a bid to artificial intelligence shares, but Apple’s supply warning and the Nasdaq’s damaged trend leave the market with a split verdict.

Amazon is pulling US futures higher after reporting its strongest cloud growth in more than four years, offering investors the evidence they wanted that heavy spending on artificial intelligence can still produce revenue. Apple is moving the other way. Its shares fell before the open after component shortages and a softer forecast exposed the pressure that the AI buildout is placing on the wider technology supply chain.

That contrast arrives after Thursday’s powerful rebound. The Nasdaq rose 2.8%, Microsoft recorded its strongest session in years and semiconductor shares recovered sharply. The move relieved some of the selling that had accumulated through July, but it did not restore the Nasdaq 100’s short-term trend. SPY is opening close to its 50-day average, while QQQ remains below both its 20-day and 50-day averages. Existing exposure in stocks holding sound daily and weekly structure can remain in place. A broader increase should depend on the opening advance surviving beyond the first reaction.

Amazon Restores the Bid; Apple Exposes the Split

Amazon rose roughly 11% before the open after AWS delivered its fastest growth in more than four years. The result follows a strong response to Microsoft’s cloud outlook and gives the market a second large company showing that demand for AI infrastructure remains robust. Nasdaq 100 futures were up around 1.15% at 7:23 a.m. ET. S&P 500 futures added 0.4%.

Apple fell almost 8% after warning that component shortages would constrain growth. The company expects revenue to rise between 9% and 11% in the current quarter, below the pace anticipated by analysts. The pressure is not simply an Apple problem. Data-centre demand is competing for processors and memory capacity, raising costs across the hardware supply chain and complicating the outlook for consumer devices.

The two reports leave investors with a more discriminating earnings market. Capital is rewarding companies that can connect AI investment to cloud growth and future cash generation. It is punishing businesses where the same investment cycle creates supply pressure or weakens the near-term outlook.

Thursday supplied the first part of the repair. The S&P 500 gained 1.66%, while the Nasdaq advanced 2.78%. Microsoft’s forecast drove a 5.2% rise in the official S&P technology sector index. Advancing stocks outnumbered decliners by more than two to one across the US market, with trading volume above its recent average.

The Philadelphia Semiconductor Index is still down more than 20% in July despite Thursday’s rebound. Friday’s opening strength will be more persuasive if it holds through the first hour and begins to recover broken trend levels.

S&P 500

SPY closed Thursday at 741.74 after rising with the broader market. It sits almost exactly at its 20-day average near 742.71 and only 0.4% below its 50-day average at 744.73. With S&P futures higher before the open, the first test is already in view.

A close above 744.73 would return SPY to the stronger side of its medium-term trend. The signal carries more weight if equal-weight participation remains firm and the opening gain is not confined to Amazon and a small group of technology names. Resistance near 755.58 would come later. On the downside, 729.10 remains the important support from Wednesday’s selloff.

Nasdaq 100

QQQ gained about 3.3% on Thursday and closed at 683.55. That was a strong rebound, not a fresh leadership failure. The structure nevertheless remains damaged after July’s decline. QQQ is still around 2% below its 20-day average at 697.43 and 4.5% below its 50-day average at 715.36.

The first repair level is 697.43. Recovering it would place QQQ back above its nearest short-term trend measure and show that the earnings rebound is extending beyond one session. The 50-day average is the larger confirmation. The prior low at 661.14 is now downside support.

Amazon’s pre-market move should pull QQQ closer to its first test, but the index still needs participation beyond one company. Strength in semiconductors, cloud infrastructure and the broader equal-weight Nasdaq would make the move more credible. A strong opening followed by a close back below Thursday’s range would leave the July correction unresolved.

S&P MidCap 400

MDY closed at 687.02, narrowly above its 50-day average near 686.24. Its role is not to replace technology as leadership overnight. It is to show whether opportunities outside the largest index weights can retain their structure while the Nasdaq repairs.

The index held up on lighter turnover than the technology rebound. Continued closes above the 50-day would preserve the broader-market cushion; a loss of 675.55 would remove it. Mid-caps support selective exposure outside damaged growth groups, provided individual stocks continue to hold their own daily and weekly patterns.

Russell 2000

IWM finished at 292.52, also just above its 50-day average. The nearby support at 288.26 held during Wednesday’s weakness, and Thursday’s rebound came with firmer turnover than MDY. Price has therefore done enough to avoid a small-cap breakdown.

The internals are less convincing than the price level. Short-term Russell breadth momentum remains weak, so IWM is not yet confirming a durable return of risk appetite. Holding above the 50-day while participation improves would strengthen the argument for broader exposure. A close below 288.26 would instead show that weakness is spreading beneath the large-cap rebound.

Thursday Was a Rebound, Not Yet a Handoff

Participation improved on Thursday, but the market has not completed a clean transfer of leadership. Roughly 64% of S&P 500 constituents remain above their 50-day averages, compared with about 45% in the Nasdaq 100. RSP remains around 2% above its own 50-day average, while QQQE is below trend. The broader S&P has retained more structural support than the Nasdaq, even though technology supplied most of Thursday’s headline gain.

The sector evidence is mixed rather than weak. Five of the eleven SPDR sector ETFs rose and six fell. Reuters reported seven of eleven official S&P sector indexes higher; the difference reflects the use of distinct instruments. Both measures show that technology led decisively without the rest of the market collapsing.

The strongest case for increasing exposure is that Thursday combined a large technology rebound with positive market-wide participation, while RSP, MDY and IWM remain near or above their 50-day averages. If SPY reclaims its 50-day and QQQ follows through above its 20-day, the July decline will begin to look like a concentrated correction that is repairing.

Semiconductor shares remain deeply lower for the month, Nasdaq breadth is the weakest of the four major universes and Apple’s warning shows that the AI investment cycle has costs as well as beneficiaries. If Friday’s gap fades while equal-weight and smaller-cap indexes lose their averages, Thursday will have been relief rather than repair.

Oil Is Rising Again; Long Yields Remain Restrictive

The cross-asset backdrop is less supportive than the futures rally alone suggests. The 30-year Treasury yield eased slightly before the open but remained close to its highest level in nineteen years. That keeps the cost of capital elevated for long-duration growth companies even as strong earnings restore demand for selected technology shares.

Oil has reversed Thursday’s decline. Brent traded near $90 a barrel and WTI near $85 as tanker traffic through the Strait of Hormuz remained thin. Some vessels have passed through, but reports that others were stopped or forced to change course have kept the geopolitical premium alive.

Suspected intervention in the yen has made the dollar a less useful equity signal this morning. The broader dollar was heading for a weekly decline. For US equities, firm oil and historically high long yields matter more; neither has prevented the rally, but both can restrain valuations if earnings momentum fades.

The Open Will Test the Quality of the Rebound

SPY’s 50-day average at 744.73 is the first decision point. Holding above it through the close would improve the broad index structure. QQQ then needs to recover 697.43, its 20-day average, before the technology rebound can be treated as more than a reaction to earnings.

Existing positions with sound daily and weekly structure can be retained. New Nasdaq exposure should not be chased solely because futures are higher. The better evidence would be an opening advance that survives the first hour, participation from semiconductors and cloud infrastructure, and continued support from RSP, MDY and IWM.

The failure sequence is equally clear. A fade beneath SPY’s 50-day would leave the broad market in its range. A reversal in QQQ while equal-weight equities weaken would show that the earnings response remains concentrated. Losses of 675.55 in MDY or 288.26 in IWM would provide stronger evidence that the correction is spreading.

The final July reading from the University of Michigan consumer survey is due at 10:00 a.m. ET. It can move rates at the margin, but today’s main test is already on the screen: whether Amazon’s earnings can extend Thursday’s rebound into a broader, durable repair without Apple, oil or long yields pulling the market back into its July pattern.