Megacap earnings and a Middle East oil spike combined to hand the S&P 500 its worst session in a month, dragging the index and Nasdaq back below recent support with tech leading the damage.
The tape turned on two reports: Alphabet's cloud beat was overshadowed after it lifted 2026 capex guidance toward $195-205 billion, reviving the AI-spend debate, while Tesla posted an outright earnings miss with negative free cash flow and opex outrunning revenue, sending shares down double digits on 131%-above-average volume. Layered on top, Brent crude pushed above $100 a barrel after Houthi forces claimed tanker attacks in the Red Sea, and Treasury yields pushed to fresh highs for the year on the inflation read-through, even as jobless claims fell to a multi-decade low. The Nasdaq's megacap complex — Meta, Microsoft, Amazon all lower alongside Alphabet — logged its worst day since last year's tariff-driven drawdown.
Leadership was defensive and energy-tilted: Chevron, Merck and Travelers held up as oil and rotation-out-of-growth flows found a home, while communication services, consumer discretionary and financials (Goldman, Robinhood) lagged. Breadth was negative into the bell, with the tape closing on its lows below the flip, consistent with dealers stuck short gamma into the print.
The risk: Intel reports after tonight's close and sets the semis tone into Friday, new home sales and Fed speakers (Bowman, Logan) land tomorrow, and next week's FOMC (July 28-29) plus more Mag7 prints keep the AI-capex and rate paths as the swing factors — a fresh oil leg or a soft Intel print flips this from a one-day flush into a trend break.