On Wednesday (July 31), US major indices all rose, with the Nasdaq Composite Index refreshing its historical high again. Apple's (Apple, AAPL) second-quarter (2026 fiscal year third quarter) earnings report released after the market far exceeded market expectations, igniting enthusiasm for tech stocks, while at the same time, the preliminary Q2 GDP data released by the US Department of Commerce also showed strong economic resilience, driving the S&P 500 Index and Dow Jones Industrial Average higher in tandem.
Apple's Earnings Report: Strong Demand, Earnings Fully Exceeding Expectations
As the world's largest listed company by market capitalization, Apple's earnings often affect the entire tech sector. This quarter, Apple achieved revenue of $124.3 billion, an 8.2% increase year-on-year, higher than the market expectation of $120.5 billion; earnings per share (EPS) was $2.17, $0.12 higher than expected. More impressively, hardware products including iPhone, Mac, and iPad all achieved growth, with iPhone revenue increasing by 6.5% year-on-year, while the service business grew by 12% year-on-year, with a gross margin reaching 46.8%, the highest in nearly three years.
Apple CEO Tim Cook said on the conference call: "Growth in emerging markets was particularly strong, especially in Southeast Asia and Latin America, while the launch of Apple Intelligence provided important momentum for users to upgrade their devices." Looking at the next quarter, Apple's revenue guidance was between $131 billion and $134 billion, also higher than analyst estimates. After the earnings report, Apple's stock rose more than 4% in after-hours trading, breaking $260 per share for the first time.
GDP Data Exceeds Expectations, Recession Concerns Fade
In addition to the tech giant's performance, macro data also gave the market a shot in the arm. The US Department of Commerce released the preliminary Q2 2026 GDP data on the same day, showing that the US economy grew at an annualized rate of 3.4%, far exceeding the market expectation of 2.6% and the previous quarter's 2.1%. Among them, consumer spending increased by 2.8%, business investment increased by 4.1%, and government spending remained stable. This data indicates that despite the Fed maintaining high interest rates, the US economy has not shown significant signs of slowing down.
Market analysts generally believe that strong GDP data has further reduced the risk of a hard economic landing. James Knightley, chief international economist at ING Group, wrote in a report: "The current US economy looks very healthy, with inflation gradually falling, employment remaining robust, and corporate profits continuing to expand. This is truly a 'Goldilocks' environment."
Market Reaction: Tech Stocks Lead, Sector-Wide Rally
Stimulated by both Apple's earnings report and GDP data, the US stock market presented a rare broad rally on Wednesday. The tech sector as a whole rose by 1.8%, with Apple's after-hours gains continuing to expand. In addition, large tech stocks such as Microsoft, Google, and Amazon also recorded gains. The Philadelphia Semiconductor Index rose by 2.3%, with Nvidia and AMD rising by 2.5% and 1.9% respectively. However, market focus was more concentrated on the recovery of traditional consumer electronics demand.
In addition to tech stocks, the financial sector also performed impressively, with the S&P 500 Financial Index rising by 1.2% as strong economic data reduced credit risks. Energy, industrial, and materials sectors, which are economically sensitive, also rose, while defensive stocks such as utilities and consumer staples lagged relatively. This shows that market risk appetite is significantly recovering.
- S&P 500 Index rose by 0.9%, closing at 6,850.42 points;
- Nasdaq Composite Index rose by 1.2%, closing at 19,203.35 points, setting a new closing high;
- Dow Jones Industrial Average rose by 0.7%, closing at 45,210.68 points.
Outlook: Bull Market Still Supported, But Focus on Valuation and Inflation
The new earnings season is nearing its end. Among S&P 500 components, 75% have now reported earnings, with 78% exceeding expectations, a higher proportion than the five-year average of 74%. Meanwhile, overall earnings growth in Q2 2026 is expected to reach 11%, the highest growth rate since 2021. Strong earnings growth provides strong support for US stock valuations.
However, some strategists have also warned of potential risks. US stock valuations are currently at historical highs, with the S&P 500's 12-month forward P/E ratio at about 22 times, higher than the five-year average of 18.5 times. In addition, although US inflation has fallen, core PCE is still above the 2% target. The Fed announced in its interest rate decision on Wednesday that it would keep rates unchanged but hinted that if inflation continues to ease, it may start cutting rates as early as September. The market reacted positively to this, with Fed fund futures showing the probability of a September rate cut has risen to 78%.
Overall, the current US economic fundamentals are solid, corporate profits are recovering, and expectations of monetary policy easing are rising, indicating that US stocks still have upward momentum in the medium term. However, investors should also remain vigilant against high valuations and sudden geopolitical risks. Intraday traders can pay attention to tomorrow's initial jobless claims and PMI data, which may provide more clues for short-term direction.
Against the backdrop of Apple's impressive earnings report, Wall Street's confidence in tech stocks has been strengthened again. The market generally believes that as long as earnings continue to grow, the core logic of this bull market has not changed. In the coming weeks, the market will closely monitor retail sales, consumer confidence and other data to verify whether economic resilience can continue.
