Wall Street ended sharply higher Thursday, with chip stocks jumping and Microsoft logging its biggest daily percentage gain in 18 years after it gave a stellar forecast that eased fears about massive spending on artificial intelligence infrastructure.
The S&P 500 climbed 1.66% to end the session at 7,437.63 points. The Nasdaq soared 2.78% to 25,122.18 points, while the Dow Jones Industrial Average rose 1.19% to 52,208.06 points.
Microsoft jumped more than 15%, boosting its stock market value by $450 billion, the greatest-ever single-day increase for a company on Wall Street.
The tech heavyweight also reported capital expenditures below estimates and said it expects to keep generating cash through its fiscal 2027.
This year, investors were spooked by big technology firms’ heavy spending on AI. Negative cash-flow reports from Alphabet and Tesla last week sparked a bout of selling in AI-linked stocks, with chip stocks also under pressure as investors questioned high valuations.
People are also reading…
Meta Platforms tumbled after the social media heavyweight reported a 91% drop in second-quarter free cash flow, indicating the financial strain of its costly AI buildout.
The PHLX chip index surged 8.2%, with Micron Technology jumping 18%, Sandisk soaring 26% and Advanced Micro Devices up 13%.
Amazon rose 3.9% and Apple dipped 1.4%; both were set to report their results after the market closed.
Amazon's stock underperformed the broader market this year due to concerns about heavy spending on AI. Apple, which has not spent heavily on AI, recently overtook Nvidia to become the world's most valuable company, with a market value of about $4.9 trillion.
Seven of the 11 S&P 500 sector indexes rose, led by technology, up 5.2%, followed by a 1.6% gain in consumer discretionary.
On Wednesday, U.S. stocks closed sharply lower after the Federal Reserve left interest rates unchanged, with mixed messages from new Fed Chair Kevin Warsh leaving traders confused about the path of borrowing costs.
Bond markets remained on edge, with the yield on the 30-year Treasury bond surging to its highest level in 19 years.
U.S. economic growth slowed in the second quarter, growing at a 1.5% rate, as the trade deficit widened, data showed. A separate reading also showed U.S. inflation slowed in June.
Qualcomm fell 2.6% after the chipmaker forecast fourth-quarter profit below estimates and said revenue from Apple products would decline faster than expected.
Fair Isaac slumped 17%. Even though the credit-scoring giant lifted its annual profit and revenue forecasts, they remained below analysts' estimates.
Starbucks rose 1.6% after the world's largest coffee chain raised its annual sales and profit forecasts.
