Market Volatility Driven by Fed Decision, AI Trade Unwinding, and Big Tech Earnings
Last week saw Wall Street recover after navigating key events including the Federal Reserve's meeting, swings in chip stocks due to a forced hedge fund liquidation, and strong earnings from major tech firms. The Dow Jones rose 1% for the week, ending a three-week losing streak, while both the S&P 500 and Nasdaq also posted gains. However, performance was mixed over July as the S&P 500 fell slightly and the Nasdaq dropped more than 3%. During its meeting, the Fed kept rates unchanged but faced concerns about inflation staying above target for too long. The bond market signaled worries that the central bank might be lagging in controlling inflation. The 10-year Treasury yield climbed to over 4.67%, and stocks fell sharply on Wednesday before recovering later in the week. A forced liquidation by Situational Awareness, a leveraged hedge fund focused on AI hardware, contributed to volatility but eventually stabilized the market. Microsoft and Amazon impressed investors with disciplined spending and strong cash flow or revenue growth from their cloud services. Microsoft gained 21% for the week while Amazon rose nearly 17%. In contrast, Meta faced scrutiny over its spending strategy despite solid ad performance.
Topics: bond yields Dow Jones Federal Reserve inflation interest rates Nasdaq S&P 500