Stocks Rebound As Microsoft Surge And Chip Recovery Lift Wall Street

U.S. equities clawed back ground after the prior day’s steep losses, which had marked the worst single-session decline for the Dow Jones Industrial Average since April 2025. Thursday’s recovery saw the S&P 500 advance 1.2% and the Nasdaq Composite climb 2.5%, putting the tech-heavy index on pace for its best day since June 15, according to market tracking data. The Dow added 348 points, or 0.7%, reversing part of an 1,100-point plunge triggered earlier in the week when the Federal Reserve decided to hold interest rates steady.

Microsoft Azure Growth and AI Spending Divergence

The market’s turnaround hinged largely on Microsoft, which leaped 15% after reporting quarterly profit that beat analyst expectations. CEO Satya Nadella attributed the strong quarter to robust growth in its Azure cloud business, pointing to how enterprise customers are utilizing Microsoft’s infrastructure to transition into artificial intelligence.

S&P 500 hits 6-year quarterly high as AI-driven tech surge lifts Wall Street

Crucially for jittery investors, Microsoft issued a capital expenditure outlook that stayed below Wall Street estimates, reassuring markets that the company plans to continue generating cash through the fiscal year. That restraint contrasted sharply with recent reports from competitors like Alphabet and Tesla, whose heavy capital outlays and negative cash-flow reports had sparked a widespread selloff in AI-linked assets.

The contrast was underscored by Meta Platforms, which fell 9% after reporting a weaker profit than anticipated alongside an increase in its forecasted spending range for the year. Market analysts noted that while some technology giants are successfully converting AI investment into tangible cloud revenue, others face heavy near-term pressure on cash flows.

Citadel Hedge Funds Post Strong First-Half Gains

Semiconductor Recovery and Global Market Movements

Hardware suppliers and chipmakers rode Microsoft’s momentum upward, clawing back portions of the sharp losses sustained earlier in the week. The iShares Semiconductor ETF rallied by more than 8%, while Micron Technology surged 13% and Advanced Micro Devices gained over 13%. Lam Research soared 19% after posting stronger profit and revenue figures than analysts expected.

International markets experienced mixed outcomes. In Europe, the pan-European STOXX 600 index rose 0.88%. In Asia, South Korea’s Kospi fell 1.23% to end its third consecutive day in negative territory.

Treasury Yields Hit 19-Year Highs Amid Federal Reserve Debate

In the fixed-income market, longer-dated Treasury yields extended their ascent after the Federal Reserve opted to leave interest rates unchanged. The decision drew dissents from three members of the 12-member Federal Open Market Committee who favored a quarter-percentage-point rate increase.

BofA: Why Investors Should Stay Long USD Through Q3

The 30-year Treasury yield reached 5.2444%, marking its highest level since mid-2007, before hovering near 5.21%. Federal Reserve Chairman Kevin Warsh defended the central bank’s stance, noting that bond yields had already climbed significantly since the previous policy meeting six weeks prior, effectively doing some of the Fed’s inflation-fighting work.

Economic releases on Thursday showed that the core reading for the personal consumption expenditures price index rose at an annual rate of 3.3% in June, remaining above the central bank’s target. Meanwhile, U.S. economic growth slowed to 1.5% in the second quarter, missing consensus forecasts of 1.8% amid a widening trade deficit. Traders responding to the inflation figures and policy outlook priced in 64% odds of a rate hike at the Fed’s September meeting.