US stocks rebounded strongly on Thursday, with the Nasdaq 100 gaining 2.8% following a selloff in one of the most-crowded AI trades. The S&P 500 rose 1.7% and recovered everything it lost on Wednesday, while the Dow Jones Industrial Average jumped 613 points (1.2%). The Nasdaq 100 climbed 2.7%, a day after slipping into a "technical correction" and falling 9.8% below the record high it reached last month. According to Business Standard, the rally was primarily driven by Microsoft's exceptional quarterly results that exceeded analyst expectations, with the technology giant surging 15.5% following its strong earnings beat. Chief Executive Satya Nadella attributed the performance to customers' increasing adoption of Microsoft's AI offerings, while investors welcomed the company's decision not to significantly raise its AI spending plans, easing concerns about heavy AI investments straining cash flows.
A rebound in giant chipmakers lifted stocks as dip buyers emerged on speculation that the artificial-intelligence trade that has powered the bull market has more room to run. Nearly every chip stock saw double-digit gains on Thursday, with AMD, Intel, Micron, and SK Hynix ADR gaining between 11% to 18%, while Sandisk shares surged 26% overnight. The Nasdaq 100's semiconductor gauge rose the most since April 2025, with large gains occurring in shares that, as of the first quarter, had been top holdings of Situational Awareness, the hedge fund led by former OpenAI researcher Leopold Aschenbrenner that earlier sold a big chunk of its holdings to Citadel after liquidating equities caught up in the AI rout. In late hours, Amazon.com Inc. jumped after its results, with the rallies outweighing a disappointing forecast from Meta Platforms Inc., as reported by Business Standard.
Microsoft's impressive quarterly results provided crucial validation for AI investments, with the company reporting robust growth in its Azure cloud business that helped boost sentiment in the technology sector. According to Business Standard, Microsoft surged 15.5% after its cloud business posted its fastest growth in four years and the company maintained its spending guidance. This performance helped reassure investors that expensive bets on AI are starting to pay off, outweighing concerns about inflation that are driving yields to their highest levels since 2007. The company's strong results were driven by strong Azure cloud growth, AI adoption, and restrained spending compared to tech rivals. However, the earnings season revealed mixed results, with Meta Platforms falling about 8% after reporting weaker-than-expected profits and raising its forecast for AI investments, as reported by Business Standard.
The Federal Reserve left interest rates unchanged on Wednesday, with three of the 12 policymakers dissenting from the majority decision, calling for a 25-basis-point rate hike. According to Live Mint, the central bank reiterated that the committee remains committed to restoring price stability but did not provide further details on how or when it would intervene. The rebound in today's trade follows the previous session's sharp sell-off after the Fed decision, with investor attention now turning to Thursday's release of the Personal Consumption Expenditures (PCE) inflation reading for June, with the monthly reading expected to turn negative largely due to lower energy prices, while the annual core reading is projected to remain well above the Fed's 2% target. The second quarter GDP figure stood at 1.5% for the US economy, lower than the estimates of 1.8% and also lower than the 2.1% figure reported during the first quarter. Additionally, the PCE inflation figure rose 3.7% year-on-year in June, in-line with expectations, while the Core PCE also rose 3.3% from last year, also in-line with what economists had projected, but both figures remained well above the Fed's 2% target.
Oil prices climbed significantly amid escalating Middle East tensions, with Brent crude futures rising $1.71 to an intraday high of $88.59 a barrel, while WTI crude futures gained $1.40 to $85 a barrel. Both benchmarks have rallied more than 20% in July, putting them on track to snap a two-month losing streak and mark their second-best monthly performance of 2026. According to CNBC, Iran's military said on Friday that it had launched attacks on strategic US assets and military bases in Kuwait and Bahrain, following the latest wave of US strikes against the Islamic Republic. The conflict between the US and Iran proved beneficial for major oil producers as elevated crude prices boosted their earnings. Exxon Mobil reported a 105% year-on-year jump in second-quarter net profit to $14.53 billion, while revenue rose 42% to $116.02 billion. Chevron posted an even stronger performance, with net profit soaring 385% year-on-year to $12.07 billion, while revenue increased 56% to $70.06 billion. Despite the geopolitical tensions, the rebound in technology stocks extended into Friday's trade, with Nasdaq-100 futures advancing 1.2% after the index rallied 3.36% in the previous session.
