Wall Street is heading into a week of earnings and jobs data after the Federal Reserve left interest rates unchanged Wednesday afternoon, even as three of the 12 members on the central bank’s policymaking committee voted for a hike. The people who live with the fallout don’t get a vote on that committee. They get the bill.
Who Gets to Decide
The Fed’s decision came with inflation still above its 2% target for too long, according to the central bank’s own framing, and with higher energy prices adding pressure amid renewed Iran war tensions. Fed Chairman Kevin Warsh tried to calm markets during his post-meeting news conference, saying policymakers would act when necessary. The bond market wasn’t impressed. The 10-year Treasury yield climbed above 4.67%, while the 30-year yield surged above 5.2% to its highest level since 2007.
Stocks took the hit. The Dow plunged more than 1,100 points, or 2.2%, on Wednesday, its worst one-day decline since April 2025. Markets recovered later in the week and finished higher, but the damage showed how quickly the financial apparatus can whip ordinary life around when rates, yields and speculation collide.
Wall Street now wants more data. The U.S. will release its report on job openings for June on Tuesday, and the most important update comes Friday with the monthly employment report for July. Employment remains one of the stronger parts of the U.S. economy, but job growth has been slowing amid broader concerns about inflation hurting households and businesses. That’s the real economy, not the ticker tape.
What the Numbers Cover Up
More than half of companies in the S&P 500 have already reported results, and profit growth has been strong. Major indexes have set records throughout the year, and the latest round of profits could help investors judge whether those higher stock values are justified. The question is framed as a test of valuation, but the pressure lands elsewhere: on workers, renters and anyone trying to keep up while prices stay stubbornly high.
This week’s corporate calendar is stacked with the usual giants. Bleach and household products maker Clorox and hotel operator Marriott International report results on Monday. Elon Musk’s satellite, rocket and AI company SpaceX, formally known as Space Exploration Technologies, releases earnings on Tuesday. The company made its market debut in June, and the stock has since surged well above and then fallen below its opening price. McDonald’s also reports earnings on Tuesday, and online travel company Expedia Group reports on Wednesday.
The market’s mood has been anything but stable. The Dow Jones Industrial Average rose 1% for the week, snapping a three-week losing streak. The S&P 500 gained 1% last week, while the tech-heavy Nasdaq climbed 1.6%. For July, the Dow edged up 0.32%, extending its monthly win streak to four. The S&P 500 fell 0.13% in July, and the Nasdaq fell 3.2%, marking back-to-back monthly losses for both.
The Big Tech Machine
The recent reversal of the "long AI hardware, short software" trade was worsened by forced selling by Situational Awareness, a highly leveraged hedge fund founded by former OpenAI researcher Leopold Aschenbrenner. The fund had to offload its troubled bets, helping stabilize the rocky AI trade. Jim Cramer on Thursday morning called the liquidation "one of the more sure signals to buy," arguing that the unwind could mark a turning point by removing a significant source of indiscriminate selling pressure. He also said the implosion of Situational Awareness was a cautionary tale about the dangers of investing with borrowed money, adding that he has consistently cautioned investors against buying stocks on margin.
Microsoft and Amazon showed investors what successful AI spending looks like. Microsoft kept its underlying capital spending outlook relatively disciplined while generating $19 billion in quarterly free cash flow. Amazon raised its full-year capital expenditure forecast by $20 billion, but Amazon Web Services delivered its fastest revenue growth in 18 quarters, and CEO Andy Jassy explained how those investments should translate into higher returns as new data centers come online. Investors rewarded both companies, with weekly gains of 21% for Microsoft and 17% for Amazon. Cramer said Microsoft had gone from "most hated" to "most loved," and urged investors to "stay long. Do not touch it." He also praised Jassy's messaging on Friday.
Meta Platforms, however, reminded investors that spending alone isn't enough. Although the Facebook and Instagram parent continued to post strong advertising growth, investors focused on a softer revenue outlook, higher capital spending and a roughly 91% decline in free cash flow. On the post-earnings conference call, CEO Mark Zuckerberg did little to convince investors that Meta's massive AI spending will translate into meaningful financial returns anytime soon. Shares fell hard on Thursday and ended the week down more than 6%. Cramer said, "My hedge fund hat would say sell it. I really didn't like the quarter."
Apple faced a different challenge when it reported quarterly results Thursday evening. The iPhone maker beat revenue and earnings expectations, but higher memory prices, supply constraints and softer guidance overshadowed the quarter. Apple has already raised prices on some Macs and iPads to offset those higher costs, and investors are waiting to see whether the company will do the same with its next iPhone lineup. Unlike its hyperscaler peers, Apple has largely avoided the AI spending arms race, and investors have rewarded that capital-light strategy as the company improves its AI offerings through partnerships with Alphabet. Shares of Apple sank on Friday and finished the week down more than 7%. Cramer called the Apple quarter "fantastic," saying the company's biggest challenge isn't AI but supply. "They just can't meet demand."