Dow Edges Higher as Nasdaq, S&P 500 Slip, Earnings Strength Offsets AI Stock Weakness

U.S. stocks ended Friday’s session mixed, as investors weighed robust corporate earnings against weakness in technology shares ahead of a critical stretch for AI leaders.

The Dow Jones Industrial Average added 34.86 points, or 0.08%, to close at 44,946.1. The S&P 500 fell 18.75 points, or 0.29%, to 6,449.79, while the Nasdaq Composite slid 87.69 points, or 0.40%, to 21,623.0.

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Market sentiment remained underpinned by a surprisingly strong second-quarter earnings season. With more than 90% of S&P 500 companies having reported results, earnings have come in 8.4% above expectations in aggregate, according to Horizon Investments. Profits grew 11.4% from a year earlier, helping justify equity valuations at more than 22 times forward earnings—levels last seen in the immediate post-pandemic rally—even as the 10-year Treasury yield holds at 4.25%.

Still, leadership in the market has narrowed, with a handful of mega-cap technology names shouldering much of the index’s gains this year. Investors are now turning their attention to NvidiaNVDA-- and BroadcomAVGO--, whose results due later this month and in early September could help determine whether the summer rally extends into what is often a seasonally challenging September.

On the corporate front, cybersecurity firm Palo Alto NetworksPANW-- is poised to report fiscal fourth-quarter results Monday after the close. Wedbush Securities said it expects continued strength in platform-based security deals and early benefits from its acquisition of CyberArkCYBR--, calling the transaction a “strategic home-run deal.” AI-enhanced offerings are expected to further accelerate revenue growth into fiscal 2026.

Elsewhere, Nice Ltd.NICE-- posted stronger-than-expected second-quarter revenue and earnings, driven by double-digit growth in its AI-powered cloud offerings. The company raised its full-year profit forecast but kept revenue targets unchanged, as it continues to integrate new capabilities and expand enterprise adoption. Wedbush maintained its “Outperform” rating but trimmed its price target to $170 from $200, citing a more conservative valuation framework.

Despite Friday’s pullback in the Nasdaq and S&P 500, the earnings backdrop remains a source of resilience for equities. “Solid second-quarter profits are helping investors justify stocks’ lofty levels,” Horizon noted, while cautioning that concentration risk and elevated valuations leave markets vulnerable to shifts in sentiment.