Pre-Market Update: Wall Street Surge Reaches Tel Aviv Stock Exchange

The last trading day of the week opens against the backdrop of a sharp recovery on Wall Street, which proved once again how much the market depends on the reports of the giants — and how quickly sentiment can turn. Let's start with the reports, because they are the main story.

After the two giants Meta and Microsoft reported, the reactions were completely opposite — a perfect lesson in what occupies the market. Microsoft jumped over 15%, its best day since 2008, after Azure cloud revenues crossed the $100 billion mark for the first time. This was also the largest single-day market cap jump for any company ever. Meta, on the other hand, plunged about 8% after missing expectations and failing to provide a clear forecast for 2027 investments.

The difference illustrates the rule of the season: both are investing billions in AI, but Microsoft proved it is profiting from it — and Meta is not. The market no longer rewards investment, but return.

After the close, two more giants reported. Amazon jumped over 9% after strong reports: the AWS cloud division grew 36.7%, the fastest growth in 18 quarters, and the AI and chip businesses each crossed an annual run rate of $25 billion. Although free cash flow plunged to negative (minus $7.6 billion) due to investments, the growth in the cloud was enough to satisfy the market.

Apple, on the other hand, fell about 6% despite beating expectations on revenue and profit, thanks to strong iPhone sales. The problem was in the details: services (the second largest business) and sales in China missed forecasts.

Beyond that, the threat of rising memory prices looms, which has already forced Apple to raise prices on MacBooks and iPads — and could pressure iPhone profit margins. This was Tim Cook's last report as CEO, before John Ternus replaces him on September 1st.

Nasdaq jumped 2.8%, the S&P 500 rose 1.7%, and the Dow added 1.2% — a sharp recovery after the Nasdaq-100 entered a correction the day before. Microsoft led, and chips recovered sharply. The market "shook off" several negative factors: new American strikes in Iran, falls in the bond market (the 30-year yield touched 5.24%, a multi-decade high), and the Fed's decision to leave the interest rate unchanged.

An encouraging figure: the PCE index for June showed inflation progressing at a slower pace — good news for the Fed. On the other hand, GDP data showed that the US economy grew slower than expected in the second quarter.

The local stock exchange also recovered impressively. After falling up to 1% during trading, it turned around and finished with a rise of up to 1.2%. The engine: chips, which erased sharp declines and jumped following the recovery on Wall Street — Tower jumped 5%. Banks also stood out with a jump of 2.2% (Leumi 3%). On the other hand, Nice fell 8% (but is still in the weekly plus), and control struggles over the company Novolog pushed the stock up 12%.

Today's opening is expected to be supported by the strong recovery on Wall Street and the positive reports from Amazon and Microsoft. On the other hand, the disappointment from Apple and the ongoing tension with Iran remain in the background.

For the Israeli saver, this week was a lesson in several principles. First, the sharp volatility — the stock exchanges went from correction to jump within days, which illustrates how dangerous it is to try to time the market.

Second, the distinction between the giants — Microsoft and Amazon were rewarded for return from AI, Meta and Apple were punished for disappointments — a reminder that even within the same "hot sector," there are winners and losers. And third, the strength in local banks and Teva this week reminds that the Israeli stock exchange is diverse despite everything. As always, broad diversification and patience are the tools that allow one to get through such a volatile week without getting burned.