NEW YORK, July 24, 2026 – U.S. equities edged higher by midday Friday, buoyed by a retreat in oil prices, but the technology sector lagged as renewed scrutiny on artificial intelligence spending weighed on major names. The Dow Jones Industrial Average rose 0.69%, while the S&P 500 gained 0.62%. The Nasdaq Composite inched up just 0.26%, underperforming as AI-related stocks faced selling pressure.
Brent crude oil fell 5% to $95.71 per barrel, providing a tailwind for the broader market after earlier overnight spikes to $102. The pullback followed reports that Pakistan was exploring potential new U.S.-Iran talks, though officials cautioned that significant hurdles remain. The yield on the 10-year Treasury note hovered near 4.67%, after touching a high of 4.713% earlier in the session.
Market Rotation Toward Cash Flow
The session saw a clear divergence between companies investing heavily in artificial intelligence and those generating strong cash flows. Investors increasingly focused on the link between spending and returns, rather than just revenue growth. This theme was evident in the reactions to several earnings reports and corporate updates.
Verizon Communications (NYSE:VZ) stood out as a winner, with shares climbing 3.22% after the telecom giant raised its free cash flow growth outlook to 9%-10% and secured a fiber contract valued at over $1 billion. CEO Dan Schulman indicated that additional agreements could deliver “multiple billions of dollars” over the coming years.
In contrast, Intel (NASDAQ:INTC) saw its stock drop 3.04% after raising its 2026 capital expenditure forecast to $20 billion, even though its Q3 revenue midpoint of $16.3 billion exceeded analyst expectations by about 8%. The market punished the higher spending outlook.
Alphabet (NASDAQ:GOOGL) posted a 24% revenue increase to $119.8 billion, but its quarterly capital expenditures of $44.9 billion exceeded operating cash flow of $39.1 billion, resulting in negative free cash flow of $5.9 billion. Despite this, shares edged up 0.65% on Friday.
Tesla (NASDAQ:TSLA) continued to face headwinds after Thursday’s 14% drop, with shares down an additional 2.86% on Friday. The electric vehicle maker reported quarterly capital expenditures of $5.8 billion and negative free cash flow, compounding investor concerns.
Looking Ahead
“Markets are becoming increasingly selective,” said Daniela Hathorn, senior market analyst at Capital.com. According to Hathorn, investors are demanding more explicit connections between spending and resulting returns. This filter will face even greater tests next week, when Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), and Amazon.com (NASDAQ:AMZN) are scheduled to report earnings. The Federal Reserve will also announce its rate decision on Wednesday, July 29.
Risks remain elevated. Oil is still vulnerable to supply shocks, and some analysts identify 4.75% as a key threshold for the 10-year yield. Any such shock could undo Friday’s rotation. For now, the overall recovery is holding steady, but the AI trade continues to divide the market.
