Stocks rebound at the open.
The bond market remains the real test.

The S&P 500 and Nasdaq opened higher after Thursday's broad decline, while long-term borrowing costs remained elevated.

At Friday's opening bell, the S&P 500 rose 0.32% to 7,665.68 and the Nasdaq Composite rose 0.51% to 26,198.84. The rebound followed Thursday declines of 0.87% and 1.00%, respectively. Small caps had also been hit: the Russell 2000 closed Thursday at 2,992.43, down 1.34%.

The larger issue is the cost of capital. The official August 20 Treasury curve closed at 4.19% for two years, 4.69% for ten years, and 5.23% for thirty years. Reuters reported that the 30-year market yield had reached roughly 5.34% during the week, its highest level since 2007.

Treasury expanded long-bond buybacks to support market liquidity, while Fed officials kept inflation and labor conditions at the center of rate decisions.

Treasury Secretary Scott Bessent said the government could further increase long-duration bond buybacks after doubling the minimum maximum size for 10- to 30-year operations to at least $4 billion. The first yield decline was brief; long-term yields rose again Thursday.

St. Louis Fed President Alberto Musalem said financial conditions remained accommodative and indicated that he leaned toward a September rate increase. San Francisco Fed President Mary Daly said the current policy setting was in a good place. The target range remains 3.50% to 3.75%, leaving the September 15–16 meeting dependent on incoming inflation, labor, and financial-condition data.

Hyperscalers remain strong credits, but the volume and repetition of issuance now matter as much as issuer quality.

Reuters reported that AI-related hyperscaler bond issuance reached $220 billion in 2026 through August 10, compared with $12.5 billion in the same period last year. Amazon's recent $25 billion long-dated sale priced around 120 basis points over Treasuries, roughly twice the spread that comparable borrowing would have required a year earlier, according to analysts cited in the report.

Foreign buyers, pensions, insurers, and asset managers have absorbed the supply, but many institutional portfolios limit exposure to a single issuer to roughly 2% to 3% of assets. That creates a practical ceiling and can push funding into bank loans, project finance, private credit, guarantees, and other structures.

Second-quarter S&P 500 earnings growth was exceptionally strong, partly because Alphabet and Amazon marked up stakes in private AI companies.

LSEG data cited by Reuters showed aggregate S&P 500 second-quarter profit growth tracking at 52%, including large mark-to-market gains at Alphabet and Amazon. Excluding those gains, growth would have been about 33%, still the strongest quarter since 2021.

The distinction matters because operating earnings tied to sales and margins are more repeatable than changes in the estimated value of private holdings. Nvidia's August 26 report will provide a more direct test of AI demand, capacity, margins, and the return on infrastructure spending.

Ross shares rose nearly 9% before the open after the company raised guidance and forecast stronger comparable sales than analysts expected.

Ross reported second-quarter revenue of $6.26 billion, up about 13% from a year earlier, and adjusted EPS of $2.06. The EPS figure included an estimated $0.60 benefit from tariff refunds, so the composition of profit is important.

The company now expects full-year EPS of $8.61 to $8.77 and comparable-sales growth of 6% to 7% in the third quarter. The result contrasts with Walmart's comparable-sales miss and points to continued demand for off-price merchandise among budget-conscious households.

The most material institutional-capital development is the financing burden created by the AI buildout. Hyperscaler bond issuance has reached $220 billion in 2026, and repeated borrowing is testing issuer-concentration limits at pension funds and insurers while creating opportunities for banks, asset managers, and private-capital providers.