Wall Street Eyes Earnings After AI-Driven Sell-Off
A sharp sell-off in artificial intelligence stocks shifts focus to upcoming earnings from Alphabet, Intel and Tesla to determine if the sector's rally can survive scrutiny.
A widening rout in artificial intelligence equities punished US stocks on Friday, capping a brutal week for the technology sector. The Nasdaq Composite fell 1.4% on the day to close at 25,520.24, bringing its weekly loss to 2.9%. The S&P 500 dropped 1% to 7,475.69 for a weekly decline of 1.6%, while the Dow Jones Industrial Average fell 0.8% to 52,146.42. Even the Russell 2000 index of smaller companies declined, shedding 0.4%.
This sharp reversal has shifted investor attention squarely toward a packed corporate earnings calendar. Market professionals are looking to these reports to determine whether the AI-driven market rally can regain its footing or if valuations have overshot reality.
Quarterly results from Alphabet and Intel will be the primary focus. Following the recent semiconductor sell-off, these releases are expected to provide fresh clues on the outlook for artificial intelligence spending. Investors need concrete evidence that capital expenditure on the technology remains robust enough to support current stock prices.
The earnings schedule extends well beyond the tech sector, offering a broader pulse check on the American economy. Updates from Tesla, American Express, Philip Morris, RTX, and IBM will provide critical insights into consumer demand and corporate spending. Other major names on the docket include General Motors, AT&T, Blackstone, Verizon, and GE Vernova.
Macroeconomic data takes a back seat this week but remains relevant ahead of the Federal Reserve's July 29 monetary policy meeting. Monday brings June's leading economic indicators, followed by weekly jobless claims on Thursday. On Friday, investors will assess July flash manufacturing and services PMIs alongside June new home sales. The data will be scoured for signs of whether economic activity is slowing or holding steady.
Interest rate expectations are largely stable for now. According to LSEG data, money markets do not fully price in another 25-basis-point Federal Reserve rate hike until December. This suggests traders expect policymakers to maintain a cautious stance in the near term.
Treasury supply will also draw attention. The US Treasury is scheduled to sell $13 billion in 20-year bonds on Wednesday, followed by a $21 billion auction of 10-year Treasury Inflation-Protected Securities on Thursday. These sales arrive as Treasury yields eased following the equity market downturn. Meanwhile, geopolitical developments will stay on the radar, with investors closely watching US-Iran tensions in the Middle East for any escalation that could jolt global risk sentiment and energy prices.
