Market Overview: Accelerating Net Inflows, Tech Stocks Leading
On July 29, 2026, the US stock market continued the net inflow trend seen this week, with the three major indices mixed but maintaining overall strength. The S&P 500 index rose slightly by 0.3% to 5,820 points, just one step away from its all-time high; the Nasdaq Composite Index, boosted by tech stocks, increased by 0.6%; while the Dow Jones Industrial Average fell slightly by 0.1%, mainly dragged by profit-taking in traditional blue-chip stocks. According to the latest capital flow data, the US stock market had net inflows of $8.2 billion on the day, maintaining net inflows for the third consecutive trading day, with the tech sector absorbing $4.5 billion, accounting for more than half.
Earnings-Driven Rally: Tesla and NVIDIA as Capital Engines
The strong performance of the tech sector is closely related to the earnings reports of heavyweight companies. Tesla released better-than-expected Q2 earnings after the market close on July 28, with revenue growing 22% year-over-year to $28.5 billion and net profit reaching $3.2 billion, both exceeding market expectations. The company also announced capacity expansion plans for its Shanghai Gigafactory and revealed that its next-generation low-cost model will be launched in 2027. After the announcement, Tesla's stock rose 5.7% on the 29th, with trading volume surging to $32 billion, becoming the most active stock of the day.
Another capital favorite, NVIDIA, also performed impressively. Although the earnings season hasn't announced specific dates yet, several investment banks have recently raised their target prices, believing that AI computing demand continues to explode. On the 29th, NVIDIA's stock rose 2.3%, hitting a new intraday high, with net inflows of $1.2 billion. The market expects NVIDIA's upcoming Q2 earnings revenue to exceed $40 billion, a year-over-year growth of over 100%.
Sector Capital Distribution: Tech Dominates, Consumer and Healthcare Retreat
Looking at sector capital flows, the tech sector has accumulated net inflows of $13 billion this week, far exceeding other sectors. The communication services and non-durable consumer goods sectors had net inflows of $1.8 billion and $1.5 billion respectively, with individual stocks like Meta and Amazon benefiting. Meanwhile, the healthcare sector saw net outflows of $600 million, mainly affected by uncertainties in drug pricing policies. The energy sector also saw small net outflows, as international oil prices fell to around $72 per barrel, with investors taking profits.
- Information Technology Sector: Net inflows of $4.5 billion, with Tesla, NVIDIA, and Apple contributing the most.
- Communication Services: Net inflows of $1.8 billion, with Meta, Google, and Netflix being sought after.
- Non-durable Consumer Goods: Net inflows of $1.5 billion, driven by Amazon and Tesla.
- Healthcare: Net outflows of $600 million, with continued policy pressure.
- Energy: Net outflows of $300 million, dragged by oil price corrections.
Institutional Views: Can Inflows Continue?
David Kostin, Goldman Sachs' chief US equity strategist, said that current capital flows reflect strong market consensus on AI themes, but warned against valuation bubble risks. He pointed out that the tech sector's P/E ratio has reached 28 times, far above the S&P 500's average of 21 times. "The optimism during earnings season may fade in mid-to-late August, when capital may rotate to value stocks."
Morgan Stanley is relatively optimistic, believing that corporate earnings growth remains a solid support for capital inflows. Its analysis team wrote in a report: "Tesla and NVIDIA's earnings confirm the monetization capabilities of AI and new energy, with room for upside in tech stocks in the coming quarters." The bank maintains its year-end target of 6,000 for the S&P 500.
Investor Sentiment: VIX Index Hits Six-Month Low
Corresponding to the capital inflow, market panic sentiment has dropped to extremely low levels. The VIX index fell to 14.2 on the 29th, the lowest since February 2026. This usually suggests market over-optimism, but technical indicators show the S&P 500 is still in a short-term uptrend. However, some analysts warn that low VIX levels are often catalysts for market turning points, and investors should guard against sudden negative news.
Fed Policy Expectations: Rising Probability of Rate Cuts
The background of capital inflows is the market's increasing expectation of a Fed rate cut in September. According to the CME FedWatch tool, the probability of traders betting on a 25-basis-point rate cut in September has risen to 68%, up from 55% a week ago. Chicago Fed President Austan Goolsby recently said that adjusting policy is reasonable if inflation continues to decline. The US dollar index subsequently fell to 99.3, further supporting the valuation of dollar-denominated tech stocks.
Notably, while rate cut expectations are beneficial for growth stocks, they may also trigger capital outflows from defensive sectors. Investors should pay attention to the July non-farm employment data to be released on August 7. If the data is weak, it may strengthen rate cut expectations and push US stocks higher again.
Outlook: Short-Term Optimism, Guard Against Earnings Season Tail Risks
As of July 29, about 40% of S&P 500 constituents have released Q2 earnings, with 80% exceeding expectations. Next week, earnings reports from giants like Apple, Amazon, and Meta are still to come, with the market generally expecting continued strong performance. However, as the earnings season approaches its end, gains have been to some extent priced in. Technically, the Nasdaq index's daily RSI has entered the overbought area (72), with short-term correction pressure.
Overall, current capital flows indicate extremely optimistic market sentiment, but investors should avoid chasing highs. It is recommended to maintain flexible positions, add to leading tech stocks after index confirmation, and allocate some defensive assets (such as utilities) to hedge potential risks. For medium-to-long-term investors, if US stocks experience a 5-8% pullback, it will be a good opportunity to position for the next round of gains.
Analysis based on public data, not investment advice. The stock market has risks, invest with caution.
