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 Nvidia and Broadcom, 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 Networks 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 CyberArk, calling the transaction a “strategic home-run deal.” AI-enhanced offerings are expected to further accelerate revenue growth into fiscal 2026.

Elsewhere, Nice Ltd. 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.