US equities opened mixed on Friday, with the S&P 500 inching higher and the Nasdaq Composite adding 0.16%, while the Dow Jones Industrial Average slipped 17 points (0.01%). The cautious start followed a record-setting Thursday session, during which the S&P 500 touched an intraday high of 7,816.70 and closed at an all-time high. Technology and communication services led the gains, each rising about 1%.
The benchmark index and the Nasdaq are on track for a third consecutive week of gains. Heading into Friday, the S&P 500 was up 0.5% for the week, the Nasdaq had gained 0.4%, but the Dow remained down about 0.4%.
Earnings strength offsets economic concerns
Investor sentiment has been buoyed by a robust second-quarter earnings season, with more than 90% of S&P 500 companies having reported. According to FactSet, second-quarter earnings growth is tracking at roughly 50% year-over-year. This corporate strength has helped sustain equity gains despite ongoing uncertainty over monetary policy and global geopolitical developments.
Technology shares, particularly software companies, have continued to outperform. The iShares Expanded Tech-Software Sector ETF has rebounded sharply over the past six months after a steep first-quarter decline, gaining more than 3% during Thursday's session. Investors also looked past weaker-than-expected July retail sales data, which showed an unexpected monthly decline.
Middle East tensions keep markets cautious
Despite easing inflation concerns earlier this week, investors remained wary as geopolitical tensions in the Middle East intensified. Brent crude futures rose about 1% after reports indicated that shipping through the Strait of Hormuz had slowed significantly following fresh attacks on vessels. The United States also signaled it could maintain a naval blockade of Iran indefinitely, raising concerns about global energy supplies. Earlier in the week, both consumer and producer inflation data came in broadly in line with expectations, reducing fears that the Federal Reserve would raise rates at its September meeting. However, higher energy prices remain a key inflation risk, prompting investors to monitor oil markets closely alongside incoming economic data. For more on oil market dynamics, see oil surges on shipping disruptions.
Applied Materials falls despite strong outlook
Among individual stocks, Applied Materials fell more than 3% despite forecasting fourth-quarter revenue above Wall Street estimates. The decline reflected continued investor caution toward AI-related stocks, where markets have recently reacted negatively to any signs of moderating growth despite solid financial results. Elsewhere, Reddit climbed more than 13% after being selected to join the S&P 500 index, effective Aug. 18. Fox Corp. shares gained after JPMorgan upgraded the media company to Overweight.
Drone manufacturers also advanced after President Donald Trump announced tariffs on imported drones and drone components. Red Cat Holdings, Unusual Machines, and AeroVironment all posted gains as investors assessed the potential impact of the proposed trade measures. For related coverage, see Ondas short interest and drone deal.
Overall, investors entered Friday balancing strong corporate earnings and easing inflation with persistent geopolitical uncertainty, while awaiting additional economic data that could shape expectations for Federal Reserve policy in the weeks ahead. The resilience of the S&P 500, despite headwinds, underscores the market's focus on fundamentals. For context on recent market moves, see S&P 500 and Nasdaq rise on CPI.
This article is for informational purposes only and does not constitute financial advice.
