MACRO - What’s Driving Overnight Risk?

Overnight Price Action

• Asia: Higher; South Korea led the rebound as chip shares bounced hard after the worst AI-linked liquidation of the month
• Europe: Mixed to firmer; Amazon’s cloud print helped tech sentiment, while oil, fuel prices, and central-bank caution kept the bid uneven
• U.S.: Futures higher; Nasdaq 100 contracts are leading as Amazon’s rally offsets Apple’s supply-chain warning
• Rates: Treasury yields are calmer after June PCE cooled, although the 30Y remains the pressure point after Warsh’s confusing hold
• FX: The U.S. Dollar is firmer after Thursday’s drop, while the Japanese Yen gave back part of its intervention-driven spike after the BOJ held rates
• Commodities: Oil is off last week’s extremes, but fuel margins remain elevated after refinery attacks and Middle East disruption tightened product markets

Catalysts

• Amazon shares jumped about 12% premarket after Q2 revenue came in near $201B and AWS sales rose 37%. AWS revenue reached roughly $42.2B, and Amazon raised full-year capex guidance to $220B as AI cloud demand stayed strong. Amazon EPS came in at $5.75, boosted by a large non-operating gain tied to Anthropic.
• Apple shares fell about 7.3% premarket after the company guided current-quarter revenue growth to 9%-11%, below expectations near 12%. Apple reported iPhone sales of $54.25B, above estimates, but supply constraints in advanced chipmaking capacity hit the forward outlook.
• Q2 GDP grew at a 1.5% annualized pace, below expectations for 2.1%, as imports and inventory drawdowns weighed on the headline. Consumer spending grew at a 3.2% pace, and business equipment investment rose 15.2%, showing domestic demand held up better than the GDP headline.
• June PCE fell 0.1% m/m and slowed to 3.7% y/y from 4.1%, while core PCE rose 0.1% m/m and eased to 3.3% y/y.
• The BOJ held rates at 1% in an 8-1 vote, with Hajime Takata dissenting in favor of a hike to 1.25%.
• Exxon earned $14.7B on an adjusted basis, while Chevron earned $12B and beat estimates as war-driven crude and refining margins lifted Big Oil.

Stat of the Day: According to Wall Street Horizon’s corporate event data universe spanning more than 11,000 global companies, Q2 2026 featured the most secondary equity offerings in five years, per Daily Chartbook. 

Market Implication

The market finally got an AI earnings report it wanted to buy. Amazon showed cloud acceleration, pricing power, and enough AI demand for investors to tolerate a larger capex plan. Apple gave the opposite signal. iPhone demand is still healthy, but supply constraints and softer guidance pushed the stock lower. GDP and PCE make the macro read trickier. The headline growth number missed, domestic demand stayed firm, inflation cooled, and Warsh still has three Fed dissents sitting behind him. The tape is better than it looked Wednesday, but it still needs rates and crude to stay quiet.

THEMATIC - Forces Behind the Tape

1. Amazon Gave the AI Trade a Cleaner Answer

Amazon did what Alphabet struggled to do and what Meta could not do cleanly. It gave investors a big AI spending plan and enough revenue evidence to justify it. Revenue came in near $201B. AWS grew 37% to roughly $42.2B. The stock jumped even as capex guidance moved to $220B. This is the market’s preferred AI formula right now: if you’re going to spend heavily, show cloud acceleration, defend margins, and explain who is paying for the servers. AWS has also been able to raise server-rental prices, which gives the AI story a real monetization channel rather than another vague productivity promise.

The Anthropic gain flattered EPS, so traders should separate the accounting from the operating read. The operating read is still good. AWS is accelerating. Advertising is growing. Subscription revenue is rising. The retail business got help from early Prime Day timing. The market is letting Amazon carry a big infrastructure bill because demand is already visible. This helps Nasdaq sentiment into August. Microsoft and Amazon have now given AI bulls real support. Alphabet’s capex reaction and Meta’s margin hit keep the group selective. The AI trade is alive, but investors are paying for monetization rather than ambition.

2. Apple Turned Supply into the Problem

Apple’s quarter had plenty of demand support. Revenue came in at $109.4B, EPS was $2.02, and iPhone sales rose 21.7% to $54.25B. The problem showed up in guidance. Management forecast 9%-11% current-quarter revenue growth, below Wall Street’s roughly 12% expectation, and pointed to advanced chipmaking capacity limits across iPhones, Macs, and some iPads.

That changes the Apple conversation. The stock had been treated as the cleanest megacap because it was spending less aggressively on AI than the hyperscalers. Now the issue is supply access. AI demand is tightening the same chip and memory ecosystem Apple needs for its devices. The company is not getting punished for a demand collapse. It is getting punished because demand is running into bottlenecks and expected price hikes. Amazon is saying AI infrastructure can generate revenue right now. Apple is saying AI competition can limit hardware supply right now. That is a very different message for the same market theme.

3. Warsh Got Better Inflation, Then GDP Complicated the Read

The macro data gave the Fed relief with a catch. June PCE fell 0.1% m/m, the first monthly decline since the pandemic period, and the y/y rate slowed to 3.7% from 4.1%. Core PCE rose just 0.1% m/m and eased to 3.3% y/y. That helps Warsh after Wednesday’s divided hold. The GDP report was less friendly on the surface. Q2 growth came in at 1.5%, below expectations for 2.1%. Imports tied to AI infrastructure and tariff front-running widened the trade deficit, while inventory drawdowns also hit the headline. The underlying demand picture looked stronger. Consumer spending rose 3.2%, equipment investment jumped 15.2%, and final sales to private domestic purchasers grew at the fastest pace since early 2023.

That is why the Fed story did not simplify. Softer PCE supports patience. Strong domestic demand, a low saving rate, gasoline above $4, and three FOMC dissents keep September alive. Warsh also welcomed higher bond yields as part of the tightening mix, which makes the long end more important than the policy rate for equities.

MICRO - Today’s Catalysts

Economic Calendar (CT)

• 7:30 - Employment Cost Index
• 8:45 - Chicago PMI
• 9:00 - Final July University of Michigan Consumer Sentiment
• Today - Fed speaker blackout ends for regional presidents

TRENDING - Reddit Retail Radar

KEY LEVELS TO WATCH

• S&P 500 (/ESU6) – Support/Resistance: 7460/7500
• Nasdaq 100 (/NQU6) – Support/Resistance: 28216/28851
• Crude Oil (/CLQ6) – Support/Resistance: 80.01/96.12
• U.S. 10Y Yield – 4.682%, YTD high sits at 4.713%
• VIX – 17.13 pre-market, July range of 14.96 to 20.88

Trade Setup Bias

Constructive for Nasdaq only if Amazon’s bid broadens. Microsoft and Amazon gave the market the AI monetization proof it needed after Alphabet, Meta, and Tesla created the cash-flow scare. Apple is the caution flag because supply constraints and price hikes can hit a stock even when demand is fine. I would use defined risk in megacap tech after the premarket gap and look for confirmation from semis, cloud software, and memory. Energy is less clean after Exxon and Chevron printed huge profits while Trump pressures fuel prices. 

Bottom Line

Friday is an AI relief trade with a macro argument underneath it. Amazon gave investors cloud growth, pricing power, and a reason to tolerate another giant capex number. Apple gave them supply-chain friction and a softer guide. PCE cooled, which helps Warsh, but GDP showed strong domestic demand under a weak headline. The BOJ held, the yen remains unstable, and Big Oil just printed war-driven profits while Trump pressures gasoline prices. The tape can finish the week stronger if Amazon pulls semis and cloud higher, the 30Y stops climbing, and crude stays below $95. A Nasdaq gap that fails before consumer sentiment would put the market right back into the July pattern: strong earnings, rough internals, and traders refusing to pay blindly for AI.

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for over 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx