US Market Breakdown: Chips Rally as Fed Fears Fade, Week of 3 August 2026

American markets have spent most of 2026 worrying that the Federal Reserve would have to raise interest rates again. In the week of 3 August that worry went away, and it went away for an uncomfortable reason: the US economy shed jobs. The July employment report, published on Friday 7 August, showed non-farm payrolls fell by 23,000 against forecasts of a gain of roughly 80,000, and revisions knocked a further 103,000 off May and June.

Wall Street read a weak labour market as a Fed that can afford to sit still. The S&P 500 closed Friday at a record 7,757.64, up 0.62% on the day and roughly 3.6% on the week, its strongest week since April. The Nasdaq Composite rose 5.2% over the five sessions and the Dow Jones Industrial Average 2.96%.

Then came Monday 10 August, and a reminder of what has been driving the whole year. With the Strait of Hormuz still effectively shut, Brent crude climbed towards $88 and the three main indices all slipped.

Wall Street

The week's shape was front-loaded. Monday 3 August set the tone after President Trump called off planned strikes against Iran: oil fell hard, with Brent down about 5% to $83.46 and West Texas Intermediate off more than 7% to $78.59, and equities took the relief. The Dow jumped 693.38 points, or 1.32%, to a record 53,178.41. The S&P 500 added 1.48% to 7,600.50 and the Nasdaq gained 2.1% to 25,913.9.

Tuesday was bigger still. The Dow climbed 907.47 points, or 1.7%, to 54,085.88, the S&P 500 rose 136.02 points, or 1.8%, to 7,736.52, and the Nasdaq added 671.10 points, or 2.6%, to 26,584.99 — records for all three headline benchmarks on the same day, powered by earnings from Palantir and Caterpillar.

Momentum then stalled. On Wednesday the Dow eked out a fifth straight gain, up 263.24 points or 0.5% to 54,349.12, but the S&P 500 slipped 0.2% and the Nasdaq lost 0.8% as memory and storage shares sold off. Thursday broke the streak properly: the Dow fell 464.02 points, or 0.85%, to 53,885.10, with the S&P 500 down 0.18% at 7,709.96 and the Nasdaq off 0.06% at 26,348.35. Friday's jobs data did the rest of the work, lifting the S&P 500 by 47.68 points to its record close, the Nasdaq by 342.26 points to 26,690.62, and the Dow by 151.83 points to 54,036.93 — leaving the Dow's own record from Wednesday intact.

Monday 10 August reversed a sliver of that. The S&P 500 and the Dow each eased about 0.1% and the Nasdaq fell 0.3% as Brent rose to $87.69, up almost 5% on the day and a fourth consecutive session of gains, after Iran's foreign minister said the waterway would not reopen without US concessions on sanctions. Higher energy costs are precisely the thing that could put a Fed rate rise back on the table, which is why an oil move now reads straight through to share prices.

The week's biggest movers

Palantir was the week's standout. The data-analytics group reported on Monday evening, and Tuesday's session took the shares up 29.5%. Nvidia ended the week more than 10% higher after Elon Musk used SpaceX's first public earnings call to say the rocket company would build its AI infrastructure exclusively on Nvidia hardware. Caterpillar rose 5.6% on Tuesday, having been up as much as 12% in morning trading, on the back of orders tied to data-centre power generation.

The losers were concentrated in advertising technology and memory. Trade Desk fell 21.9% on Friday, the worst showing in the S&P 500 that day, and slipped a further 5.8% on Monday. AppLovin dropped about 20% on Thursday despite revenue growing 52.8%. Western Digital fell roughly 13% on Thursday, dragging SanDisk and Micron Technology down with it, after storage guidance that beat published estimates still failed to match what the market had priced in. SpaceX — listed only since June — fell more than 13% on Wednesday as investors digested a sharp increase in AI capital spending.

Company news in focus

The largest corporate story landed on Monday, after the reporting week closed. Nvidia announced partnerships with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to establish financing platforms intended to mobilise more than $500bn of third-party capital — roughly £370bn at Monday's rate of about $1.35 to the pound — for AI compute infrastructure. The structure treats data-centre compute rather like commercial property or toll roads: an asset to borrow against. Chief executive Jensen Huang told CNBC he approached only those six firms and none refused. Nvidia shares still fell nearly 3% on the day, with the Financial Times report that preceded the announcement read by some investors as evidence of how capital-hungry the AI build-out has become.

Archer Aviation agreed to buy three Boeing subsidiaries — Wisk Aero, SkyGrid and Insitu — in an all-equity deal that hands Boeing a 16.5% stake in Archer, commits Boeing to invest up to $55m in a coming funding round, and adds more than $200m of annual revenue. It is expected to close by the end of 2026.

In healthcare, privately held Curium agreed on 3 August to merge with Lantheus, paying $102.50 per share in cash plus contingent value rights worth up to a further $12.00 tied to product milestones through 2030 — up to $114.50 a share, or roughly $8bn (about £5.9bn) in total.

Salesforce shares fell around 3% on Thursday after a multi-layer executive reshuffle in which president and chief engineering officer Srini Tallapragada moved to an advisory role. McDonald's named Skye Anderson president of its US business, with chief executive Chris Kempczinski saying the chain "didn't execute at the level we needed to" at home. And Trade Desk replaced its finance, marketing and commercial chiefs alongside its results, and a wave of broker downgrades followed within days.

Earnings in focus

Palantir reported adjusted earnings of $0.41 a share on revenue of $1.94bn, against forecasts of $0.34 and $1.81bn. Revenue grew 93% year on year, US commercial revenue 149%, and the company posted net income above $1bn for the first time. Full-year guidance went up to about $8.15bn, implying 82% growth.

AMD delivered record second-quarter revenue of $11.54bn, up 50%, with data centre revenue roughly doubling to $6.7bn and adjusted earnings of $1.66 a share against $1.62 expected. Third-quarter guidance of about $13bn comfortably exceeded the $12.52bn consensus. Shares still fell about 7% in the next session, with attention on gross margin pressure from the Helios AI infrastructure ramp.

Caterpillar reported adjusted earnings of $8.17 a share against $6.20 expected, on record revenue of $20.5bn, up 24%. It raised its 2026 sales growth forecast to the mid-to-high teens and trimmed its expected full-year tariff bill to around $2.2bn.

Disney earned an adjusted $2.06 a share against $1.86 expected, though revenue of $25.25bn, up 7%, came in a touch under forecasts. Experiences revenue rose 10% to $9.97bn and entertainment streaming 11% to $5.53bn. Disney lifted its fiscal 2026 buyback target to at least $9bn from $8bn, helped by $1.2bn from selling its 50% stake in A+E Global Media to Hearst. The shares rose about 3.6%.

Kraft Heinz beat with adjusted earnings of $0.56 a share on revenue of $6.26bn and raised full-year guidance to $2.03–$2.09, but the shares slipped. Trade Desk grew revenue just 3% to $715.1m, missing estimates, and guided to $650m for the current quarter — well below expectations and a year-on-year decline.

Sectors in focus

The dispersion was stark. Information technology led the S&P 500 with a gain of about 7.2% over the week, while energy was the worst performer at roughly −3.2% as crude fell back early on the prospect of a Hormuz deal. The iShares Semiconductor ETF ended the week more than 7% higher and the Philadelphia Semiconductor Index rose more than 8%, which is the single clearest explanation for the Nasdaq's 5.2% week.

That concentration cuts both ways, and UK investors holding US index funds should understand the arithmetic. A week in which Nvidia adds more than 10% will drag the S&P 500 higher almost regardless of what the other 499 constituents do, because a handful of megacap technology names now account for an outsized share of the index. The same mechanism worked in reverse on Monday: Nvidia's 3% fall was enough to pull the Nasdaq down 0.3% even as energy shares rallied on the oil move. Energy's weak week is worth keeping in perspective too: the sector fell while crude was falling, and Monday showed how quickly that relationship reverses when Hormuz headlines turn.

Macro and the Fed

The July payrolls report was the week's pivot. Employment fell 23,000, with local government education shedding 50,000 posts and retail trade 19,000. The unemployment rate actually ticked down to 4.1% from 4.2%, but largely because fewer people were working or looking for work. Interest rate futures cut the odds of a 25 basis point Fed rate rise to roughly 46%, from about 55% the day before.

Bond and currency markets moved accordingly. The 10-year Treasury yield fell three basis points on Friday to 4.641%, down 8.6 basis points across the week. The dollar index slipped 0.37% to 99.5650, and sterling rose to about $1.350, its highest since 15 July. Gold gained $102.27, or 2.41%, to $4,353.23 an ounce for its best week since January, with silver up 4.16% to $64.10.

The complication is oil. June CPI, published on 14 July, showed headline inflation of 3.5% with core at 2.6%, helped by a 5.7% monthly drop in the energy index as Iran tensions eased. Monday's move back above $87 for Brent points the other way, which is why this week's inflation data matters more than usual.

Still to come

A note on American conventions for UK readers: US companies report quarterly rather than half-yearly, and most issue formal guidance for the coming quarter — which is why AMD could beat on every reported line and still fall 7%. Results usually land after the 16:00 New York close, so the share price reaction shows up in after-hours trading and then in the following session, which is the middle of the UK night.

This article is for information and education only. It is not financial advice or a recommendation to buy, sell or hold any investment. Always do your own research.