A surge in Amazon.com stock Friday gave the Nasdaq enough momentum to obscure Apple's slump.
Beneath the surface of the Nasdaq composite's 1% gain was a tug of war between Apple stock, which fell 7.4%, and Amazon's which surged 15%.
The iPhone maker lost $357.8 billion in market capitalization, its largest one-day market cap decline on record and the third-largest of any U.S. company. The post-earnings slide, Apple's largest since 2014, followed company forecasts for its September quarter that fell short of Wall Street's expectations.
But Apple's move was offset by a 15% surge in Amazon.com stock following that company's report of accelerating cloud-computing sales. That rally handed the cloud provider and retailer its largest market-cap gain ever.
The sharp moves at the two tech giants pulled indexes in opposite directions. The S&P 500's tech sector, which includes Apple, ended the day 0.5% lower, while the consumer-discretionary sector, which includes Amazon, surged 6.1%. Overall, the S&P rose 0.7%, while the Dow industrials advanced 0.5%, or 277 points.
Friday's gains were enough to push the Dow into positive territory for the month. The blue-chip index added 0.3% during July, while the S&P 500 edged lower 0.1% and the Nasdaq slipped 3.2%. All three gained 1% or more for the week.
July has been a turbulent period for stocks in which AI concerns, the Iran war and the Federal Reserve whipsawed markets. Worries about the cost of AI investment and concerns the spending won't yield the expected blockbuster profits sparked sharp swings in some stocks over recent weeks.
"It's like being on a whale-watching trip. Everybody rushes to the side of the boat where there's a whale, then rushes back to the other side when the whale swims under the boat," said Steve Sosnick, chief strategist at Interactive Brokers.
Some investors saw a relief rally at play Friday after AI-focused investment firm Situational Awareness finished selling the bulk of its holdings. In South Korea, the AI-fueled Kospi index jumped 18%. The volatile benchmark had plunged in recent weeks after rapid gains earlier this year.
The Fed added significant pressure to markets this week. Treasury yields extended recent gains on Friday after three central bank officials explained why they cast dissenting votes in favor of raising interest rates this week. The yield on the 10-year U.S. Treasury note rose to 4.743%, its highest intraday level since January 2025. The 30-year yield rose to 5.274%, a new 19-year high, after the sharpest one month rise since 2024.
The pressure on bonds was different from Wednesday, when investors dumped longer-term Treasurys out of concern that Fed Chairman Kevin Warsh might be reluctant to raise interest rates if inflation persists. On Friday, yields climbed across maturities as investors dialed up bets on a near-term rate increase.
Amazon's strong earnings meanwhile provided a boost to battered AI hyperscaler bonds. The extra yield, or spread, investors demand to hold its 6.1% bonds due in 2056 over Treasurys dropped to 1.1 percentage point from 1.23 percentage point Thursday, according to MarketAxess.
Bonds backed by other hyperscalers also rallied relative to Treasurys, including those issued by Meta Platforms, Alphabet and Oracle. Investors have been demanding higher yields to hold those bonds in recent weeks amid increasing concerns over how much the companies will borrow and spend to fund chip purchases and the construction of data centers.
"These companies are not stupid. They're spending even more money because it's incredibly profitable to increase capacity," said Chris Grisanti, chief market strategist at MAI Capital Management. "I said to our professionals, 'Look, if you were running a business that was capacity constrained and had really high margins, you would beg, borrow and steal to expand that business.'"