Closing Recap

U.S. stocks finished mixed as a powerful rally in mega-cap technology propelled the Nasdaq and S&P 500 to new all-time highs, while the broader market, including the Dow and small caps, finished lower amidst weak market breadth and mixed economic data. 

Key Takeaways 

• S&P & Nasdaq Hit New Records: The S&P 500 and Nasdaq Composite edged to fresh all-time highs, showcasing the continued dominance of large-cap technology. 
• Narrow, Mega-Cap Driven Rally: Gains were highly concentrated in a few mega-cap tech stocks (Mag7), particularly Alphabet (GOOGL) after its strong earnings. The Dow and Russell 2000 both closed lower. 
• Weak Market Breadth: The rally was very narrow, with ten of eleven S&P sectors and the vast majority of stocks finishing in the red, highlighting underlying weakness. 
• Economic Data Mixed: Weekly jobless claims came in better than expected, but flash PMIs were mixed (weak manufacturing, strong services), and new home sales were soft. 
• ECB Holds Rates: The European Central Bank kept interest rates steady, as widely expected, pausing after seven consecutive cuts. 
• Gold Eases, Oil Gains: Gold prices pulled back as risk appetite for tech remained strong, while crude oil posted modest gains.
•  Yields & Dollar Rise: Treasury yields edged higher on resilient labor market data, and the U.S. dollar was mixed to slightly stronger. 
• Tech Momentum Intact: The Nasdaq has now closed above its 20-day moving average for 63 straight days, the longest such streak since 1999. 

Market Overview

It was a new day with a familiar result for U.S. equity markets, as the S&P 500 and Nasdaq Composite once again carved out new all-time highs. However, today’s advance was a clear illustration of a market being carried higher by a select few giants. The rally was almost entirely powered by mega-cap technology stocks, with Alphabet (GOOGL) surging after reporting strong quarterly sales driven by AI demand and announcing a significant increase in capital spending. This news provided a powerful tailwind for the entire AI ecosystem, including semiconductors. 

Index	Up/Down	% Change	Last
DJ Industrials	-316.38	-0.007	44693
S&P 500	4.44	0.0007	6363
Nasdaq	37.94	0.0018	21057
Russell 2000	-30.99	-0.0136	2252

This narrow leadership, however, masked significant underlying weakness. The Dow Jones Industrial Average, weighed down by a slump in IBM, finished lower. Small caps also took a notable step back, with the Russell 2000 falling over 1.3%. Market breadth was decidedly negative, and ten of the eleven S&P sectors closed in the red, with only the heavily tech-weighted Technology sector posting a gain. This divergence highlights that while the major indices appear robust, the rally is not being broadly shared across the market. 

Investors continue to operate with very little fear, a trend that has persisted for nearly three months since the tariff-induced sell-off in April. This “straight shot up” has been fueled by better-than-expected earnings, a quieting of geopolitical tensions, and ongoing hopes for trade deal resolutions. Today’s economic data was mixed; while weekly jobless claims were encouragingly low, flash PMIs showed a divergence between a weak manufacturing sector and a strong services sector, and new home sales continued to show softness. The European Central Bank also held interest rates steady, as expected.

Economic Data

Economic data yesterday presented a mixed picture, with a resilient labor market contrasting with a contracting manufacturing sector and soft housing data. 

• Weekly Jobless Claims: Fell to 217,000 from 221,000 prior, better than the 226,000 consensus. The 4-week moving average also declined. 
•  Manufacturing PMI: 49.5 (vs. 52.9 in June), indicating contraction. 
• Services PMI: 55.2 (vs. 52.9 in June), indicating strong expansion. 
• Composite PMI: 54.6 (vs. 52.9 in June). 
• New Home Sales (June): Rose +0.6% m/m to a 627K unit annualized rate, missing the 650K estimate. Supply remains elevated at 9.8 months. 

Commodities, Currencies, and Treasuries 

Gold prices slipped, with August futures falling $24.10 (-0.71%) to settle at $3,373.50 per ounce. The decline came as risk appetite remained focused on the tech rally and the U.S. dollar showed some firmness. Crude oil prices posted modest gains, with WTI settling up $0.78 (+1.20%) at $66.03/bbl, finding some support from the strong services PMI data and broader market stability. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.78	USD/bbl	66.03
Brent	0.67	USD/bbl	69.18
Gold	-24.1	USD/oz	3373.5
EUR/USD	-0.0004	USD	1.1766
USD/JPY	0.37	JPY	146.87
10-Year Note	0.016	%	0.04404

U.S. Treasury prices declined, sending yields higher for a second consecutive session. The 10-year yield rose about 1.6 basis points to 4.404%, as the resilient labor market data slightly tempered expectations for imminent, aggressive Fed rate cuts. The U.S. dollar was mixed, weakening against the Euro but strengthening against the Yen. Bitcoin and Ethereum continued their recent rallies.

Looking Ahead 

The market continues to be driven by the powerful momentum in a handful of mega-cap technology stocks. With the ECB decision in the rearview mirror and a relatively light economic calendar tomorrow, attention will remain on corporate earnings reports. While sentiment remains bullish, the extreme narrowness of today’s rally and weakness in small caps will be key factors for traders to watch for signs of potential exhaustion or a broadening of market participation. The Fed remains in its pre-meeting blackout period.