The S&P 500 rebounded sharply on Thursday as strong earnings from Microsoft Corp. (NASDAQ:MSFT) and a broad rally in semiconductor stocks lifted investor sentiment following the previous session’s selloff. Polymarket traders now expect the benchmark index to extend those gains at Friday’s open.
The S&P 500 rose 1.66% to close at 7,437.63, after opening at 7,390.45. The July 31 Polymarket contract implied a 94% probability that the index will open higher on Friday.
Why That Number Matters
The final trading day of July caps one of the busiest weeks of the earnings season, with investors continuing to assess whether massive artificial intelligence investments are translating into stronger financial performance.
After Thursday’s close, Amazon (NASDAQ:AMZN) reported better-than-expected second-quarter revenue, driven by strength in its cloud-computing business, sending its shares up more than 9% in extended trading. Apple Inc. (NASDAQ:AAPL) also topped revenue expectations on the back of a 22% jump in iPhone sales.
Markets are also continuing to digest the Federal Reserve’s decision earlier this week to leave interest rates unchanged, while Treasury yields remain near multi-year highs as investors reassess the outlook for inflation and monetary policy.
The Bull Case
Thursday’s rally suggested investor appetite for AI-linked companies remains intact when earnings support lofty valuations.
Microsoft surged 16% after reporting stronger-than-expected Azure cloud growth, sparking an advance across semiconductor stocks. The iShares Semiconductor ETF (NASDAQ:SOXX) climbed more than 8%, while Micron Technology (NASDAQ:MU) gained 18% and Advanced Micro Devices (NASDAQ:AMD) rose more than 13%.
The optimism extended globally on Friday. South Korea’s Kospi recorded its best day on record as chipmakers rallied, Japan’s Nikkei 225 climbed sharply and European equities also traded higher, reinforcing positive risk sentiment heading into the U.S. session.
The Countercase
Despite the rebound, risks remain.
The divergence in Big Tech earnings continues to highlight uneven returns from AI spending. While Microsoft’s results boosted confidence, Meta Platforms Inc. (NASDAQ:META) fell 8% after issuing soft revenue guidance and reporting a 91% drop in second-quarter free cash flow. Apple also slipped in after-hours trading despite beating revenue estimates, underscoring investors’ high expectations.
Meanwhile, Treasury yields remain elevated after the Federal Reserve kept interest rates unchanged earlier this week.
S&P 500 futures rose 0.48% early Friday.
How The Previous Bet Played Out: The July 30 Polymarket contract attracted just $9,180 in traded volume, making it one of the quietest S&P 500 prediction markets this month. The index opened at 7,390.45, above the previous session’s close of 7,316.15, meaning the contract ultimately resolved “Up.”
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