U.S. stocks mixed, tech earnings boost Nasdaq, energy under pressure

On Wednesday (July 28), the three major U.S. stock indexes closed mixed as investors digested a batch of strong tech earnings while remaining cautious ahead of the preliminary Q2 GDP reading. At the close, the Dow Jones Industrial Average fell 34.5 points, or 0.1%, to 34,567.89; the S&P 500 was nearly flat, up 0.02% at 4,390.12; the tech-heavy Nasdaq Composite rose 112.3 points, or 0.8%, to 14,678.90, its highest in nearly two weeks.

Tech Giants Beat Earnings Expectations, Boost Market Sentiment

This earnings season has been impressive, with large tech companies' better-than-expected results boosting confidence. Apple (AAPL) reported fiscal Q3 revenue up 12% YoY after the bell, with Greater China sales rebounding above expectations and iPhone sales remaining strong; its shares rose 1.3% in regular trading and continued to climb after hours. Microsoft (MSFT) also delivered strong results, with Azure cloud revenue growth accelerating to 28%, driving its stock up 2.1% on the day.

Additionally, Google parent Alphabet (GOOGL) rose 1.8% on a rebound in ad revenue; Amazon (AMZN) gained 1.5% driven by Prime Day sales. The tech sector overall led the market, with the Philadelphia Semiconductor Index up 1.2% and chip stocks like Nvidia (NVDA) and AMD advancing.

"The resilience of tech giants' earnings far exceeds expectations, providing solid support for the market," said Mike Wilson, a well-known Wall Street strategist and head of investment at Morgan Stanley. "Despite lingering macro uncertainties, improving corporate fundamentals are drawing capital back into growth stocks."

Energy Sector Under Pressure as Oil Prices Fall

In contrast to tech, the energy sector was the biggest drag of the day. The S&P 500 Energy Index fell 1.8% as international oil prices continued their recent decline. Brent crude futures broke below $70 per barrel, settling at $69.80, down more than 5% from last week's highs. Concerns over slowing global economic growth and OPEC+ production increases weighed on supply-demand balance. Exxon Mobil (XOM) fell 2.3%, Chevron (CVX) lost 2.1%, and Occidental Petroleum (OXY) dropped over 3%.

"The pullback in energy stocks reflects a reassessment of demand," said Bank of America analyst Jean-Pierre Ramos. "If economic data weakens, the sector could face further pressure."

Macro Data and Fed Moves in Focus

Market attention is also on key economic data due this week. The Commerce Department will release the advance Q2 GDP on Thursday, with economists generally expecting annualized growth to slow from 2.1% in Q1 to 1.8%. Additionally, the June core PCE price index will be released on Friday; as the Fed's preferred inflation measure, its reading is expected to influence policy expectations.

Although Fed Chair Powell struck a hawkish tone at his first press conference last week, downplaying forward guidance and hinting at possible rate hikes, the market still sees a >70% probability of rates staying unchanged in September. Traders are watching next week's July nonfarm payrolls report to confirm the cooling labor market. However, the strong tech rebound has led some investors to believe the "soft landing" scenario is becoming reality.

Sector Rotation and Fund Flows

By sector, communication services, information technology, and consumer discretionary rose, while energy, utilities, and real estate fell. Fund flows show investors continue to exit defensive sectors and shift toward more cyclical and growth-oriented areas. The latest BofA Merrill Lynch Global Fund Manager Survey shows institutional investors' allocation to tech stocks rose to the highest in 12 months, while cash holdings were reduced.

"The market is currently in a phase where earnings determine direction," said Mark Haefele, Chief Investment Officer at UBS Global Wealth Management. "As long as profits remain healthy, U.S. equity valuations can hold up amid volatility."

Before Thursday's open, a batch of consumer giants including Coca-Cola and Procter & Gamble will report results, while Tesla (TSLA) and Meta (META) are due next week. Overall, more than 70% of S&P 500 companies that have reported so far this July earnings season have beaten expectations, above the historical average.

Outlook

Technically, the S&P 500 has been consolidating in a narrow range of 4,350-4,400, awaiting macro catalysts to break the stalemate. The Nasdaq has reclaimed its 50-day moving average, with short-term momentum strong. Analysts caution that despite tech's leadership, the risk of narrowing market breadth remains—if only a few giants drive the index, correction pressure could build later.

As of writing, U.S. stock index futures edged higher, with cautious optimism prevailing. Investors will closely watch the movement of fed funds futures after the GDP release to capture any signals of policy expectation shifts.