US stocks closed lower on Friday, capping a weak week for Wall Street as a deepening selloff in semiconductor stocks and renewed concerns over artificial intelligence spending weighed on investor sentiment.

The decline came despite a strong start to the second-quarter earnings season, with rising geopolitical tensions in the Middle East adding to market uncertainty.

The Dow Jones Industrial Average fell 394 points, or 0.75%, to close at 52,158.96.

The S&P 500 declined 1.01% to 7,457.78, while the Nasdaq Composite dropped 1.40% to 25,511.12.

For the week, the S&P 500 lost more than 1%, the Nasdaq fell over 2%, and the Dow slipped nearly 1%.

Semiconductor stocks lead market lower

Technology shares remained under pressure as investors continued to reassess the sustainability of the artificial intelligence investment boom that has fueled markets over the past year.

The VanEck Semiconductor ETF (SMH) fell more than 8% for the week, marking its third weekly decline in four weeks.

The Philadelphia Semiconductor Index recorded its steepest weekly loss in more than a year and has fallen nearly 18% so far in July, although it remains up about 65% year to date.

The latest pressure followed the launch of a new artificial intelligence model by Chinese startup Moonshot AI, which claimed its Kimi K3 model narrows the gap with leading offerings from US companies.

The announcement added to concerns that increasing competition could reduce future demand for advanced AI chips and moderate the pace of technology spending.

The weakness in chipmakers eventually spread across the broader market as investors trimmed exposure to AI-related stocks.

Netflix was also among the session’s notable decliners, falling more than 6% after its earnings outlook failed to reassure investors about the sustainability of its growth.

Uber Technologies also declined after announcing its planned acquisition of Germany’s Delivery Hero in a deal valued at nearly $15 billion.

Shares of Intuitive Surgical also moved lower after the company maintained its procedure-growth forecast while warning that insurance-plan changes may be delaying patient care.

Earnings remain strong despite market weakness

Although equity markets finished the week lower, the second-quarter earnings season has started on a positive note.

According to LSEG, 49 S&P 500 companies have reported results so far, with 90% exceeding analysts’ expectations.

Analysts now expect aggregate second-quarter S&P 500 earnings growth of 26%, up from projections of 19.2% at the beginning of April. Strong bank earnings earlier in the reporting season have helped lift overall expectations.

Economic data released on Friday presented a mixed picture.

Consumer sentiment improved to a five-month high in July, while industrial production edged up 0.1%. However, single-family housing starts and building permits both declined.

Middle East tensions lift energy stocks and oil prices

Investors also monitored escalating geopolitical tensions after the United States and Iran continued military strikes across the Middle East.

The renewed conflict has disrupted energy flows through the Strait of Hormuz, a key global oil shipping route, supporting higher crude prices.

US West Texas Intermediate crude traded above $81 per barrel, while Brent crude remained above $86.

The rise in oil prices helped energy stocks outperform the broader market, making the sector the strongest performer within the S&P 500 during Friday’s session.

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Some of Wall Street’s fastest-growing companies are turning expansion into something more tangible: cash.

Nvidia, Micron Technology, CrowdStrike and Palo Alto Networks have each reported sharp increases in operating or free cash flow while management or analysts lifted profit forecasts.

That combination provides stronger confirmation than an earnings beat alone because cash is available for research, acquisitions, buybacks and protection against downturns.

The catch is valuation, as these are financially strengthening businesses, but their shares already assume continued execution, leaving investors exposed if AI infrastructure, memory pricing or cybersecurity demand slows.

Nvidia and Micron turn the AI boom into cash

Nvidia generated a record $50.3 billion of operating cash flow in its fiscal first quarter, up from $27.4 billion a year earlier.

Free cash flow reached about $48.6 billion, giving the chipmaker ample room to fund product development, secure supply and support an additional $80 billion share-repurchase authorisation.

Consensus fiscal 2027 earnings estimates subsequently rose 14%, to $9.34 a share from $8.18.

KeyBanc analyst John Vinh raised his Nvidia target to $330 from $310 and retained an Overweight rating.

Writing in a note, Vinh said the CUDA software stack created “significant barriers to entry” and expected the Vera Rubin ramp to begin in July despite a slight delay.

Micron offers a more cyclical but faster-accelerating cash story. Fiscal third-quarter operating cash flow reached $25.39 billion, versus $4.61 billion a year earlier, while free cash flow hit $18 billion.

FactSet now expects fiscal 2026 earnings near $73.20 a share.

Long-term customer agreements provide added visibility, but Micron remains exposed to memory pricing and the industry’s history of overbuilding.

CrowdStrike converts subscriptions into record cash flow

CrowdStrike’s fiscal first-quarter operating cash flow rose 54% to $590.9 million, while free cash flow increased nearly 68% to $468.5 million. Its free-cash-flow margin widened to 34% from 25%.

The cybersecurity company raised its fiscal 2027 adjusted earnings forecast to between $4.88 and $4.96 a share, from $4.78 to $4.90.

The improvement reflects the economics of its Falcon platform: customers can add identity, cloud and other security modules without CrowdStrike rebuilding its sales and infrastructure base for each product.

Morgan Stanley analysts said CrowdStrike still had room for further valuation expansion, while 22 brokerages raised targets after the quarter.

Yet the same report showed the stock trading at 138 times forward earnings.

That leaves little protection if annual recurring revenue, deal activity or cash conversion falls short of elevated expectations.

Palo Alto’s margins rise, but acquisitions cloud the picture

Palo Alto Networks generated $871 million of operating cash flow in its fiscal third quarter, up 39% from a year earlier.

Adjusted free cash flow climbed 57% to $910 million, while the trailing 12-month adjusted free-cash-flow margin expanded 4.3 percentage points to 38.5%.

Management raised fiscal 2026 adjusted earnings guidance to $3.77-$3.79 a share.

BTIG called Palo Alto its “top pick”, citing stronger momentum and larger contracts, while Wells Fargo raised its target to $420 and pointed to a “clear catalyst path.”

The platformisation strategy encourages customers to consolidate network, cloud, identity and AI-security tools with one provider, supporting recurring revenue and cash generation.

However, CyberArk and Chronosphere contributed $388 million of quarterly revenue, and adjusted cash flow excludes some acquisition-related costs.

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Wall Street’s biggest banks are proving that even geopolitical uncertainty and volatile markets can be highly profitable when trading desks stay busy and artificial intelligence fuels an unprecedented wave of capital raising.

The six largest US banks generated a combined $55 billion in second-quarter profits, comfortably exceeding analysts’ expectations as market volatility, record AI-related fundraising and a resurgence in investment banking produced one of the strongest quarters for the financial industry in years.

Even after excluding JPMorgan Chase’s one-off Visa and equity-related gains, the six banks still generated roughly $50.4 billion in profit during the quarter.

Every one of the six lenders exceeded Wall Street estimates on both earnings and revenue, driven largely by record trading activity and a sharp rebound in investment banking.

Trading desks deliver blockbuster quarter

Trading operations once again emerged as the biggest earnings driver as geopolitical tensions and energy market volatility kept investors actively repositioning portfolios.

Financial markets were shaken during the quarter by the conflict in the Middle East and disruptions to shipping through the Strait of Hormuz, while a spike in oil prices reignited inflation concerns and prompted investors to reassess expectations for Federal Reserve interest-rate cuts.

Those rapid swings translated into exceptional trading volumes across equities, currencies, commodities and fixed income.

Goldman Sachs led the industry with a record $7.42 billion in equities trading revenue, a 72% increase from a year earlier.

Fixed-income trading contributed another $4.59 billion, up 32%.

JPMorgan Chase generated $6 billion in equities revenue, an 86% jump from last year, while fixed-income trading remained steady at $6.1 billion, bringing total markets revenue to $12.1 billion.

Morgan Stanley also reported record equity trading revenue of $6.3 billion, up 69%, alongside $2.5 billion from fixed income.

Bank of America posted record equities trading revenue of $3.6 billion, up 70%, while fixed-income, currencies and commodities (FICC) revenue rose 9% to $3.5 billion.

Citigroup’s equities trading business climbed 45% to a record $2.3 billion, while fixed-income revenue increased 7% to $4.7 billion.

Although its trading franchise remains considerably smaller, Wells Fargo also benefited from heightened activity.

Markets revenue within its Corporate and Investment Banking division rose 24% to $2.21 billion, with equities trading alone increasing 64%.

Dealmaking powers investment banking recovery

The recovery in investment banking proved equally significant, with AI emerging as one of the biggest catalysts for capital markets activity.

Investment banking fees surged across all six banks as mergers and acquisitions, equity offerings and debt issuance accelerated during the quarter.

Goldman Sachs generated $3.4 billion in investment banking fees, up 55% year over year, supported by strong advisory work and record debt underwriting.

JPMorgan Chase reported $3.3 billion in fees, up 30% and its strongest investment banking quarter since 2021.

Morgan Stanley posted the fastest growth among its peers, with investment banking revenue jumping 58% to $2.44 billion.

Bank of America, Citigroup and Wells Fargo also recorded healthy increases in advisory and underwriting income.

According to Dealogic, global investment banking revenue climbed 24% during the first half of 2026 to $61.4 billion, driven by mega mergers, a vibrant IPO market and elevated trading volatility.

Among the quarter’s most lucrative transactions was SpaceX’s record-breaking $86 billion initial public offering in June, the largest IPO in US history.

The listing alone generated roughly $500 million in investment banking fees across participating firms, with Goldman Sachs serving as lead-left underwriter while JPMorgan, Bank of America, Citigroup and Wells Fargo participated as co-underwriters and advisers.

AI spending is creating a new financing cycle

Executives across Wall Street argued that artificial intelligence is creating opportunities extending far beyond technology companies themselves.

Banks are financing data centres, underwriting debt and equity offerings, advising on acquisitions and facilitating the enormous capital flows required to build AI infrastructure worldwide.

For example, Wells Fargo advised on NextEra Energy’s $67 billion acquisition of Dominion Energy and Apollo’s $35 billion financing package for AI company Anthropic.

Goldman Sachs CEO David Solomon described the investment wave as creating “a ripple effect” throughout the US economy by generating financing and trading opportunities across public and private markets.

“We are in the middle of an AI capex super cycle where there are demands on financing in every single financing instrument, in every region of the world and across every single industry,” Goldman Chief Financial Officer Denis Coleman said.

Wells Fargo banking analyst Mike Mayo said the AI investment cycle “reached a tipping point” during the second quarter, identifying Goldman Sachs, JPMorgan Chase and Morgan Stanley as the biggest beneficiaries.

Following the strong earnings reports, Mayo raised his price targets on both Goldman Sachs and JPMorgan.

Consumer lending remains resilient

While capital markets dominated the headlines, consumer banking also continued to support earnings despite persistent inflation pressures.

Banks reported relatively low delinquency rates, while expectations that interest rates will remain elevated for longer continued to support lending profitability.

Bank of America added one million new credit card accounts during the quarter as customers spent $266 billion on debit and credit cards, up 9% from a year earlier.

Wells Fargo reported a 33% increase in auto loan revenue, helped by higher balances and stronger loan originations.

Even as many households continued to face rising costs for essentials such as fuel and groceries, banks continued to benefit from healthy consumer spending and resilient credit quality.

Banks are also adopting AI internally

The AI boom is not only generating advisory and financing fees but is also reshaping banks’ own operations.

Lenders are increasingly deploying artificial intelligence to improve productivity, automate workflows and manage costs.

Bank of America disclosed that it now has more than 300 approved artificial intelligence and machine learning use cases across its business.

These include 114 live generative AI applications, with 34 already deployed at scale to improve workflow efficiency and frontline productivity.

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Andy Burnham will enter Downing Street on Monday with a promise that has eluded successive British prime ministers for more than a decade: reviving economic growth.

But unlike his predecessors, Burnham is betting that the answer does not lie in Whitehall.

Instead, the incoming Labour leader is proposing a sweeping transfer of power to Britain’s regions, arguing that local leaders—not central government—are best placed to unlock investment, rebuild industry and improve living standards.

His slogan, “Good growth in every postcode,” captures a strategy that prioritises devolution, public investment and regional development over short-term fiscal stimulus.

While economists broadly agree that the approach could strengthen Britain’s economy over time, many also caution that it is unlikely to deliver immediate gains for households facing a prolonged cost-of-living squeeze.

A decentralisation agenda at the heart of economic policy

Speaking after being confirmed as Labour leader at a special party conference on Friday, Burnham outlined an agenda centred on shifting power away from Westminster.

“We will take power back from Westminster and Whitehall and give it to the place you live,” he told delegates. “More power over life’s essentials so you can make them work better.”

He described the reforms as “the biggest change in our lifetimes to the way the country is run,” arguing that economic growth cannot continue to be directed solely from London.

“It is time for Whitehall to accept that growth cannot be ordered from the top down. Instead, it can only be nurtured from the bottom up,” Burnham said in a speech on June 29.

The centrepiece of the plan is the creation of a new “Number 10 North” office in Manchester, which would oversee the government’s decentralisation programme and help local authorities reform transport, housing, utilities and industrial policy.

Burnham also wants to extend devolution beyond England, offering Scotland, Wales and Northern Ireland greater opportunities to deepen their existing powers.

A long-term answer to Britain’s growth problem

Burnham inherits an economy that has struggled to regain momentum since the global financial crisis.

Britain’s gross domestic product per person has increased by only about 7% since early 2008, a sharp slowdown compared with the decade before the crisis.

More recently, official data showed the economy grew by just 0.1% in May after contracting by the same amount in April, underscoring how fragile the recovery remains.

Oxford Economics believes Burnham’s strategy reflects a structural rather than cyclical response to these challenges.

“Burnham’s economic strategy will likely focus on regional policy and public investment, aiming to address disparities in spending while promoting devolution. Although these measures may not yield immediate growth, they could lay the groundwork for long-term improvements in the UK economy,” the consultancy said.

Economists argue that local authorities often possess better information about labour markets, infrastructure needs and business investment than central government.

In a New York Times report, Diane Coyle, professor of public policy at the University of Cambridge, said regional officials are better positioned to understand what skills employers require and can tailor education and training accordingly.

Britain is “extraordinarily centralized,” said Coyle.

The OECD echoed that assessment this week, saying reducing Britain’s large regional productivity gaps could lift overall national growth by improving transport, employment and local economic participation.

Manufacturing and defence move back into focus

Beyond decentralisation, Burnham wants to rebuild Britain’s industrial base.

He has pledged to support domestic manufacturing in sectors including steel, defence, energy, farming and food production while reducing reliance on overseas suppliers.

Defence investment is expected to play a central role in that strategy, with Burnham arguing that military spending should also help regenerate industrial regions through domestic production.

He has also pledged to preserve Britain’s “sovereign manufacturing” capabilities and make it easier for UK firms to secure public-sector contracts.

The approach marks a shift toward using industrial policy alongside regional development to stimulate economic activity.

Housing and public services

Housing is another pillar of Burnham’s economic programme.

He has promised what he describes as the largest council house-building programme since the years immediately following the Second World War, using surplus public land to reduce construction costs.

Burnham has also endorsed a “Housing First” approach modelled on Finland, aiming to tackle homelessness alongside broader affordability challenges.

His longer-term plans include a 10-year strategy to reduce the cost of housing, energy, water and transport by placing these sectors under greater public oversight.

Rather than widespread nationalisation, economists expect the government to rely on tighter regulation and partnerships with private companies given fiscal constraints.

Danny Sriskandarajah, chief executive of the New Economics Foundation, believes the government will also need to introduce measures that provide faster relief.

The new administration will likely deliver “a few eye-catching measures to address the cost of living,” potentially targeting energy prices, rents or social housing, he said in the NYT report.

Tax reforms likely to remain targeted

Burnham has pledged to retain Labour’s fiscal rules, including balancing day-to-day spending with revenue and avoiding tax increases on working people.

Instead, he has proposed targeted reforms.

Among them are lower business rates for pubs and music venues, funded through higher taxes on large distribution warehouses used by online retailers such as Amazon.

He also wants to raise the threshold at which business rates begin, removing many small high street businesses from the tax altogether.

Another idea under consideration is a land-value tax, which could eventually replace stamp duty or council tax.

Business welcomes stability but wants engagement

Despite the emphasis on economic reform, sections of Britain’s corporate sector remain uneasy.

According to the Financial Times, several major businesses have struggled to establish regular communication with Burnham’s advisers before he enters office.

Executives reportedly fear the incoming administration is prioritising government restructuring and devolution ahead of business engagement.

Some business leaders also worry that the transition team lacks dedicated advisers responsible for liaising with industry on economic policy.

Whether Burnham can bridge that gap while delivering his decentralisation agenda may prove one of the defining tests of his premiership.

His strategy promises to reshape how Britain governs its economy.

The bigger question is whether it can finally deliver the sustained growth successive governments have failed to achieve.

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As the second-quarter earnings season of 2026 approaches its most critical stretch, the global equity market finds itself at a pivotal crossroads.

For over two years, a relentless, AI-driven bull run has propelled mega-cap technology valuations to historically elevated levels.

However, the narrative on trading desks has undergone a fundamental shift. The era of rewarding companies simply for uttering the words “artificial intelligence” is officially over.

As Alphabet, Microsoft, Meta, Amazon, and Apple prepare to open their books between July 22^nd  and July 30^th, Wall Street is demanding concrete evidence of monetization.

Investors are no longer grading on a curve; they want to see the receipts.

Big tech earnings ahead: the $725 billion arms race

The defining metric of this entire reporting cycle will undoubtedly be capital expenditure (capex).

The sheer scale of infrastructure investments being deployed by the four major US hyperscalers – Amazon, Microsoft, Alphabet, and Meta – has reached eye-watering proportions.

According to updated consensus data, their combined capex guidance now sits at an unprecedented $725 billion for the current year, representing a staggering 77% increase from 2025.

2026 projected capex commitments:

Amazon: ~$200 billion

Microsoft: ~$190 billion

Alphabet: $180 billion – $190 billion

Meta Platforms: $125 billion – $145 billion

This staggering allocation of capital into graphics processing units (GPUs), power grids, and massive data center footprints has triggered intense anxiety among institutional allocators.

While this structural build-out serves as a massive secular tailwind for hardware providers like Nvidia (which won’t report its data center metrics until August 26), it places immense pressure on the software and cloud giants to prove this capital is yielding high-margin returns.

A guidance cut this week would signal weak underlying enterprise demand – while an unbacked increase in spending without a corresponding bump in revenue could spark a sharp margin-driven sell-off.

The reporting calendar: key dates and battlegrounds

The heavy lifting begins next week, with the market tightly focused on three specific reporting windows:

• July 22, 2026 (Alphabet): Google’s parent company kicks off the gauntlet alongside Tesla. Alphabet’s Q1 results saw Google Cloud revenue expand by an astonishing 63% year-on-year to hit $20 billion, boasting a record 32.9% operating margin. Wall Street is looking for Q2 revenue to hit roughly $116.8 billion. The core focus will be whether Google Cloud can sustain its 63% growth crown or if aggressive new market entrants have begun eating into its enterprise pipeline.
• July 29, 2026 (Microsoft & Meta): Microsoft will present its fiscal fourth-quarter results, where any print for Azure growth below 35% will likely be treated as a severe deceleration. Simultaneously, Meta will need to prove that its $125 billion+ capex is continuing to optimize its ad-targeting engine and drive top-line growth to offset the massive cash burn of its infrastructure layer.
• July 30, 2026 (Amazon & Apple): Amazon is expected to print revenue near $196 billion, with the market hyper-focused on AWS margin expansion. Apple will report its fiscal third-quarter numbers with an estimated revenue of $108.9 billion. Apple presents a fascinating contrarian play; by leveraging an installed base of over 2.3 billion active devices to deploy “Apple Intelligence,” it is executing a capital-light AI strategy that insulates its margins from the data center spending war engulfing its peers.

Cloud growth: The ultimate litmus test

Because cloud infrastructure is where enterprise AI demand materializes first, the sequential and year-over-year growth rates of Azure, AWS, and Google Cloud will serve as the market’s ultimate truth mechanism.

Investors are highly attuned to the risk of a “margin squeeze” – a scenario in which heavy depreciation costs from newly built data centers kick in before corporate clients scale up their paid software seats and API usage.

A note of caution was already introduced to the broader tech sector following IBM’s earnings miss on July 14^th, which triggered a sharp one-day decline.

While analysts isolated that specific event to hardware supply-chain timing rather than systemic weakness in macro AI demand, it illustrated just how fragile investor sentiment has become.

With valuations priced for perfection, the upcoming multi-day stretch will decide whether Big Tech’s massive architectural bets can sustain the next leg of the macroeconomic expansion, or if the market is due for a harsh reality check on the actual velocity of AI monetization.

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