On August 7, 2026, the US stock market entered the last trading day of the week. Driven by better-than-expected earnings from tech giants, the Nasdaq Composite Index climbed steadily after the opening bell, with intraday gains briefly exceeding 1%, leading the three major indices. The S&P 500 and the Dow Jones Industrial Average also recorded modest gains, with overall market sentiment leaning optimistic. However, investors have not completely let down their guard—multiple Fed officials are scheduled to speak, and the market is awaiting the latest signals on the interest rate path.
Tech Earnings Season: Beating Expectations Becomes the Main Theme, AI Dividends Continue to Materialize
This earnings season has entered its latter half, with the performance of the tech sector becoming the market's focal point. As of August 7, over 75% of S&P 500 constituents have reported second-quarter results, with the tech sector's performance being particularly impressive. According to FactSet data, the tech sector's earnings growth rate reached 18.3% year-over-year, far exceeding the market's prior expectation of 12.5%.
Chip giant NVIDIA continued its strong momentum, with its data center revenue growing over 120% year-over-year, significantly surpassing Wall Street estimates. CEO Jensen Huang stated during the earnings call that the demand for computing power for generative AI is still accelerating, and orders for the next-generation Blackwell architecture chips have been booked through 2027. Buoyed by this news, NVIDIA's stock price rose for three consecutive trading days after the earnings release, with a cumulative gain of over 8%.
Another tech giant, Apple, also delivered a satisfactory report card. Although iPhone sales growth slowed to 3%, its services revenue grew 14% year-over-year, hitting a record high. Apple CEO Tim Cook noted that the number of subscribers to services like the App Store, Apple Music, and iCloud has surpassed the 1 billion mark, providing solid support for the company's long-term growth.
Notably, internal rotation within the tech sector is accelerating. Traditional hardware giants like Intel and Dell reported lackluster performance, while cloud computing and AI-related companies continue to attract capital. Amazon's AWS cloud business revenue grew 22% year-over-year, and Microsoft's Azure cloud services revenue growth rebounded to over 30%. This indicates that the market is shifting funds from traditional tech stocks to AI and cloud computing tracks with higher growth potential.
Diverging Trends Among Major Indices: Nasdaq Leads, Dow Under Pressure
As of press time, the Nasdaq Composite was at 18,245.67 points, up 0.85%, having hit an intraday high of 18,320.12 points, a new high in nearly two weeks. The S&P 500 was at 5,634.89 points, up 0.32%, with the tech sector contributing the majority of the gains. The Dow Jones Industrial Average lagged, at 39,876.54 points, down slightly by 0.05%, weighed down by weakness in the energy and financial sectors.
By sector, the tech sector led with a 1.2% gain, while communication services and consumer discretionary rose 0.8% and 0.6%, respectively. The energy sector bucked the trend, falling 1.5%, mainly pressured by a pullback in international oil prices. WTI crude oil futures fell 2.3%, dropping below $78 per barrel, due to heightened concerns about a global economic slowdown and rising disagreements within OPEC+ regarding production increases.
The financial sector also underperformed, with JPMorgan Chase and Goldman Sachs shares falling 0.4% and 0.6%, respectively. Although the US 10-year Treasury yield remained around 4.2%, market concerns about credit risk have risen, especially as default rates in the commercial real estate sector continue to climb, weighing on bank stocks.
Fed Dynamics: Rate Cut Expectations Cool, Probability of Holding Steady in September Rises
The market's focus is now shifting from earnings season to the Fed's policy trajectory. Earlier this week, Fed Governor Christopher Waller made hawkish remarks, stating that although inflation has eased, it has not yet reached the 2% target, the labor market remains tight, and therefore there should be no rush to cut rates. Waller's comments significantly cooled market expectations for a September rate cut.
According to the CME FedWatch Tool, as of August 7, the market sees a 72% probability that the Fed will hold rates steady at its September meeting, up from just 45% a month ago. The probability of a 25-basis-point cut dropped from 55% to 28%. This shift in expectations is directly reflected in Treasury yields: the 2-year Treasury yield rose back to 4.35%, the 10-year yield stabilized near 4.20%, and the yield curve inversion further narrowed to 15 basis points.
Analysts point out that the Fed's cautious stance is not without reason. Although headline inflation has fallen from a high of 9.1% to around 3.0%, core services inflation (especially housing and healthcare) remains sticky, and the job market has shown unexpected resilience. July nonfarm payrolls increased by 225,000, exceeding the market expectation of 180,000, and the unemployment rate held steady at a low 3.7%. These data points suggest the US economy is not in a recession, but inflationary pressures have not fully subsided either.
Investors need to closely monitor tonight's speech by Fed Chair Jerome Powell at the Economic Club of Chicago. The market widely expects Powell to reiterate a 'data-dependent' stance and not provide a clear timetable for rate cuts. If Powell's tone is hawkish, it could trigger short-term market volatility.
Mixed Performance for Chinese ADRs: Alibaba's Buyback Plan Boosts Confidence
Chinese ADRs listed in the US showed mixed performance today. Alibaba (BABA) shares rose 2.3% to close at $112.45. The company previously announced a new $30 billion share buyback plan, one of the largest in the history of Chinese ADRs. Market analysis suggests this move signals management's confidence in the company's long-term value to investors, helping to boost market sentiment.
Pinduoduo (PDD) shares fell 1.8%, despite the company's Q2 earnings report showing 85% year-over-year revenue growth, as the market expressed concerns about regulatory risks facing its cross-border e-commerce business, Temu. JD.com (JD) shares edged up 0.3%, showing relatively stable performance. In the new energy vehicle sector, NIO and XPeng fell 2.1% and 1.5%, respectively, dragged down by an intensifying industry price war.
Overall, the valuation of the Chinese ADR sector remains at historically low levels, but investor concerns about geopolitical risks and regulatory uncertainty have not fully dissipated. For Asian investors, Chinese ADRs remain a noteworthy allocation option, but stock selection is crucial, prioritizing companies with solid fundamentals and ample cash flow.
Investment Strategy: Focus on Earnings Season and Sector Rotation Opportunities
For the current US stock market, institutional investors generally recommend a strategy of 'selective stock picking and balanced allocation.' Morgan Stanley's chief US equity strategist, Michael Wilson, noted that while the overall market valuation is high, the tech sector's earnings growth momentum remains strong, and investment opportunities in AI-related companies still exist. He suggests investors focus on 'enabler' companies that can sustainably benefit from the AI wave, such as chip manufacturers, cloud service providers, and software developers.
Goldman Sachs advises investors to watch for rotation opportunities into value stocks. The bank's analysts suggest that as expectations for Fed rate cuts shift, cyclical sectors like financials, energy, and industrials may see a phased rebound. Additionally, small-cap stocks (Russell 2000 Index) have been active recently, indicating that funds are flowing from large-cap tech stocks into broader market areas.
For Asian investors, currency risk must also be considered when allocating to US stocks. The US Dollar Index has recently fluctuated around 103, while the RMB/USD exchange rate has held near 7.25. If the dollar weakens, it will benefit overseas investment returns denominated in local currencies. Therefore, investors can appropriately consider opportunities in dollar-denominated assets while using currency hedging tools to manage exchange rate risk.
Market Outlook: Short-Term Volatility Likely, Long-Term Trend Remains Positive
Looking ahead, analysts at Huatai Securities believe the US stock market may remain volatile in the short term. On one hand, the positive factors from earnings season are being priced in by the market; on the other hand, uncertainty surrounding Fed policy and geopolitical risks (such as the Middle East situation and US-China relations) will continue to unsettle market sentiment. The S&P 500 is expected to fluctuate between 5,500 and 5,800 points.
However, from a long-term perspective, the allocation value of US stocks remains prominent. The resilience of the US economy and the vitality of technological innovation provide solid support for the market. For investors with a long-term investment horizon, the current pullback presents a good opportunity to accumulate quality assets at lower prices. Especially in frontier fields like AI, cloud computing, and biotechnology, US companies still hold a global leading position, making these tracks worth holding for the long term.
As of press time, the gains of the three major US stock indices have slightly narrowed, and the market is awaiting Fed Chair Powell's speech. Investors should remain patient, closely monitor policy signals, and adjust their positions flexibly.
