S&P 500

Key insight

AI mega-cap earnings are delivering the revenue proof needed to justify stretched valuations, but the Fed holding rates with markets pricing a 63% chance of a September hike makes the 10-year yield at 4.65% the principal ceiling on further multiple expansion.

The S&P 500 is holding near its Thursday close of 7,437 after a 1.7% surge driven by Microsoft's 16% earnings pop and Amazon AWS's 37% YoY cloud growth beat, with 73% of components above their 200-day MA — the broadest breadth reading since December 2024.

Main risk

Fed rate hike risk at September FOMC meeting

CME FedWatch prices a 63% probability of a rate hike in September, which — combined with the 10-year Treasury yield already at 4.65% — could compress P/E multiples and derail the AI-driven rally if confirmed by hot August CPI or PCE data.