Market Overview: Weak Data Ignites Bull Enthusiasm
On the morning of Tuesday, August 4, 2026, US three major indices, after a brief hesitation at market open, collectively surged during the session. As of press time, the Nasdaq Composite Index led gains with over 1.8%, approaching the all-time high set in July 2026; the S&P 500 index rose 1.2%, returning to the key psychological level of 6,000 points; the Dow Jones Industrial Average performed relatively moderately, rising about 0.6%.
The core catalyst that ignited this round of market movement was the just-released US July ISM Services PMI data. The data showed that the US July ISM Non-Manufacturing Index recorded 48.8, not only below the expected 51.0, but also fell below the 50 watershed line, marking that the service sector, which accounts for the largest share of the US economy, unexpectedly fell into a contraction zone after a long period of expansion. In contrast, the value for June was still at a relatively healthy level of 52.3. The sharp drop in this data, together with the rise in the unemployment rate in last Friday's non-farm employment data, jointly constructed a picture of "soft landing" or even "mild recession", which is exactly the script that stock market bulls—especially high-growth tech stock bulls—most like to see.
Market Logic: The Perfect Narrative of Bad News Being Good News
Under the current macro trading framework, weak economic data not only failed to trigger panic selling, but instead completed the narrative loop of "bad news is good news". Its transmission logic is very clear: service sector contraction means inflation pressure will further ease, while the cooling of the job market will give the Fed more policy room.
The CME Fed Watch tool showed that within minutes after the ISM data was released, the probability of the Fed cutting rates by 50 basis points at the September meeting soared from 18% the previous day to 45%, and the expected cumulative rate cut for the year even reached 125 basis points. This aggressive rate cut expectation directly suppressed various-maturity US Treasury yields, with the 10-year Treasury yield falling below the 3.85% level, and the US dollar index also diving. The decline in the risk-free interest rate center significantly increased the tolerance for tech stock valuations in the future cash flow discount valuation model, thus triggering a comprehensive outbreak of risk assets led by the Nasdaq.
Sector Focus: Tech Giants Reclaim Leadership
Against the backdrop of rising rate cut expectations, tech giants and the semiconductor sector, which are highly sensitive to interest rates, became the absolute mainline during today's session.
Tech stock real-time quotes show that large tech stocks generally strengthened. NVIDIA's gains expanded to 4.5%, leading the Philadelphia Semiconductor Index, and the long-term logic of AI computing demand reignited after valuation pressure eased; Apple, after a slight adjustment yesterday, rebounded more than 2% today, as investors are digesting the boost to hardware replacement cycles from its upcoming AI feature updates; Microsoft and Amazon also recorded gains of over 2%, with growth prospects of cloud computing and AI businesses regaining premium.
Notably, within the tech sector, capital is flowing from defensive software stocks with excessive previous gains to semiconductor hardware stocks with more attractive valuations. Meanwhile, traditional value-focused sectors like energy and consumer staples performed flat, showing a clear "sector rotation" feature. This also confirms that under an environment of loose liquidity expectations, market risk appetite is significantly recovering.
Stock Movements and Capital Games
In addition to macro-level drivers, the unusual movements of many popular stocks during the session today are also worth noting. Tesla's stock price fluctuated violently in early trading, first opening lower due to a month-on-month decline in July China market deliveries, then quickly pulled up by optimistic sentiment brought by rate cut expectations, currently rising about 1.2%. This reflects that the current market sentiment is extremely excited, and bull capital is using every short-term negative for low-entry.
In addition, the small-cap Russell 2000 index performed brilliantly today, rising as high as 2.3%, far exceeding the three major indices. This further confirms that the market is not worried about a hard landing, but is interpreting weak data as "just right" cooling. Small-cap stocks are more sensitive to interest rates, and their strong rebound indicates that capital is spreading from large tech stocks to broader cyclical growth stocks, and market breadth is improving.
Future Strategy: Beware of Over-Optimism and Liquidity Traps
Although the current market is prosperous, as professional investors, we still need to maintain a clear mind. The ISM Services PMI falling below the boom-bust line, although beneficial to rate cut expectations in the short term, if subsequent retail sales or consumer confidence data further deteriorate, the market logic may instantly switch from "soft landing" to "recession trading", at which time the high valuations of tech stocks will face severe tests.
From a technical perspective, the Nasdaq index is currently approaching its historical high, and although trading volume has increased, it has not shown decisive breakthrough volume. If the index repeatedly fails to break through at this position in the short term, it may form a double-top pattern. For intraday traders, the latter part of today needs to pay attention to temporary speeches by Fed officials and the selling pressure of profit-taking at market close. For medium and long-term investors, the current strategy core is still to closely follow the actual rate of decline in real interest rates, and the upcoming retail giant earnings reports to verify consumption resilience.
