Key facts
- US stocks rallied Thursday, with the Dow, S&P 500, and Nasdaq posting gains.
- Microsoft's stock surged 16.3% after its quarterly profit exceeded analyst expectations.
- Microsoft CEO Satya Nadella highlighted AI adoption and noted no substantial increase in AI investment spending.
- Meta Platforms fell 9.5% after reporting weaker-than-expected profits and raising its forecasted spending range.
- Semiconductor-related companies like Micron Technology, Lam Research, and Advanced Micro Devices saw significant gains.
- The 30-year Treasury yield reached a 19-year peak.
- The Japanese yen sharply appreciated, prompting speculation of intervention.
U.S. stocks rebounded on Thursday, with the S&P 500 rallying 1.3% and the Dow Jones Industrial Average up 0.9%, driven by a significant surge in Microsoft's stock. The Nasdaq composite jumped 2.3%, recovering from recent losses.
Microsoft's stock leaped 16.3% after it reported a stronger-than-expected profit for the latest quarter, with CEO Satya Nadella attributing growth in its Azure cloud business to customer adoption of AI. Crucially for investors, Microsoft did not announce a substantial increase in AI investment spending, a concern that has impacted other major tech companies.
In contrast, Meta Platforms, the parent company of Facebook and Instagram, fell 9.5% after reporting weaker-than-expected profits and raising its forecasted spending range for investments. This highlights ongoing investor concerns about the profitability and productivity gains from AI investments.
Companies involved in the semiconductor supply chain also saw gains, recovering some of their recent sharp declines. Micron Technology jumped 16%, Lam Research soared 17.6%, and Advanced Micro Devices rallied 12.9%.
In the bond market, longer-term Treasury yields held steady after Wednesday's increases. The yield on the 10-year Treasury eased to 4.66%, and the 30-year Treasury yield remained at 5.20%. These yields move with investor expectations for inflation and economic growth.
Federal Reserve Chairman Kevin Warsh reaffirmed the central bank's commitment to reducing inflation to 2%, despite not raising interest rates. He suggested that market yields have already climbed since the last Fed meeting, potentially aiding the fight against inflation. However, this has led to questions about the Fed's willingness to act if inflation worsens.
Recent economic reports indicated that U.S. economic growth slowed more than expected in the spring, while inflation remained above the Fed's target, though it did slow from May. In commodity markets, Brent crude oil prices fell 1.2% to $87.01 per barrel.
Globally, European stock indexes rose, while Asian markets showed a mixed performance. South Korea's Kospi fell 1.2%, with Samsung Electronics dipping 0.7% despite reporting record profits and strong chip demand.