U.S. markets enter Friday, July 31, 2026, with conditions set by the Thursday, July 30 close.

Stocks rebounded hard. Microsoft led the rally. AI stocks came back. Chip stocks surged. The Nasdaq jumped. The S&P 500 erased Wednesday’s drop. The Dow gained more than 600 points. Small caps improved. Oil eased. Gold rose. Long-term yields stayed high.

The S&P 500 closed at 7,437.63.
The Nasdaq closed at 25,122.18.
The Dow closed at 52,208.06.
The Russell 2000 closed at 2,946.10.

The surface strengthened. The internal structure improved. But the rally still leaned on one clear idea: AI can still lead when earnings prove the story.

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Thursday’s session showed gains across all major indexes.

The Nasdaq rose +2.8%.
The S&P 500 rose +1.7%.
The Russell 2000 rose +1.4%.
The Dow gained +1.2%.

That ranked the major indexes from strongest to weakest as:

Nasdaq, S&P 500, Russell 2000, Dow.
The Nasdaq gained 679.24 points.
The S&P 500 gained 121.48 points.
The Dow gained 613.92 points.
The Russell 2000 gained 39.79 points.

The strongest signal came from technology. Microsoft jumped after strong earnings and better cloud results. That mattered because investors had been asking one simple question:

Is AI spending turning into real profit? On Thursday, Microsoft gave the market a better answer. AI stocks recovered. Chip stocks also surged. The Philadelphia Semiconductor Index jumped 8.2%. That helped repair part of Wednesday’s damage.

The Nasdaq had the cleanest rebound. It rose 2.8% after leading the prior selloff. The S&P 500 also recovered. It moved back above 7,400 and erased Wednesday’s drop. The Dow gained more than 600 points. Microsoft was a major reason. Small caps improved too. The Russell 2000 gained 1.4%. That showed buyers returned beyond mega-cap technology.

The equity message was clear:

They stayed careful with companies where AI spending still looks too heavy.

Treasury yields stayed elevated.

The 2-year yield moved near 4.23%.
The 10-year yield moved near 4.67%.
The 30-year yield moved near 5.21%.

The bond market did not fully join the stock rally. That matters. Stocks rallied because Microsoft helped restore confidence in AI earnings. Bonds stayed cautious because inflation and long-term rate pressure have not gone away.

The 30-year yield stayed near its highest level since 2007. That is the main warning signal. Long-term yields near 5% keep pressure on valuations. They also make the market less forgiving. Growth stocks need stronger earnings when rates stay this high.

The 10-year near 4.67% also remains important. It keeps financial conditions tight.
The 2-year near 4.23% shows markets are still watching the Federal Reserve closely.

The rate message was simple:

The dollar stayed firm. The U.S. Dollar Index remained near 101. The euro was mixed. The yen recovered from recent weakness. The dollar stayed supported by high U.S. yields. That kept the global backdrop tight. A firm dollar can limit commodity gains. It can also pressure foreign markets.

The currency market did not send a clean risk-on signal. It showed investors still want protection while rates remain high.

Oil eased. WTI crude traded near $84. Brent crude moved lower after recent pressure. Spot gold rose near $4,110. Oil gave markets some relief. That helped after the recent inflation scare. Lower oil reduces pressure on inflation expectations. It also helps calm bond markets. Gold moved higher.
The metal gained as investors stayed cautious around rates, inflation, and global risk.

The commodity message improved, but only slightly. Oil cooled. Gold stayed firm. That means inflation pressure eased, but uncertainty did not disappear.

Friday’s setup is stronger, but not clean. Thursday gave the market what it needed. Microsoft showed that AI spending can still produce results. Chips rebounded. The Nasdaq recovered. The S&P 500 moved back above 7,400. The Dow gained more than 600 points. Small caps improved. That was the good news. The harder part is rates.

The 30-year yield stayed near 5.21%. That keeps pressure on long-term valuations. It also means the market needs more proof from earnings. The Federal Reserve is still important. Inflation is still important. AI spending is still under review. The market is not rejecting AI. It is separating proof from promise. That is the key shift.

Key reference levels:

Markets enter Friday after a sharp rebound. The Nasdaq jumped. The S&P 500 recovered. The Dow gained more than 600 points. Small caps improved. Microsoft led. AI stocks bounced. Chip stocks surged. Oil eased. Gold rose. Long-term yields stayed high.

The key takeaway: Thursday’s close showed that AI can still drive the market when earnings support the story. Microsoft restored confidence, chips rebounded, and stocks recovered fast. But the bond market is still restrained. With the 30-year yield near its highest level since 2007, the next move depends on whether more companies can prove that AI spending is turning into real profit.