U.S. stocks closed higher on Thursday, with the Nasdaq Composite climbing approximately 680 points as technology shares led the recovery. The gains reversed some of Wednesday's sharp selloff, fueled by strength in Microsoft and chipmaker stocks. The Dow Jones Industrial Average rose 613.92 points, or 1.19%, to 52,208.06; the Nasdaq surged 679.24 points, or 2.78%, to 25,122.18; and the S&P 500 gained 121.48 points, or 1.66%, to 7,437.63.
Microsoft shares soared 15.5%, marking its biggest single-day percentage gain in 18 years, driven by robust growth in its Azure cloud business. The surge lifted the broader semiconductor sector, with the iShares Semiconductor ETF (SOXX) advancing 8.5%. In contrast, Meta Platforms, Inc. shares tumbled nearly 8% after the company issued a weak revenue outlook and disclosed that its second-quarter free cash flow plummeted 91%.
The divergence between two AI investment strategies
Stephen Evans, Chief Investment Officer at Pave Finance, commented on the contrasting performances of Microsoft and Meta Platforms, Inc. "It ultimately comes down to the tale of two AI investment strategies. One company is boosting profits while spending heavily, while the other is letting those costs erode its bottom line," he said.
U.S. Treasury yields remained under pressure, with the 30-year bond yield hovering near 2007 highs after the Federal Reserve decided to hold interest rates steady. Wall Street's prior session was lackluster; on Wednesday, the Dow plunged over 1,100 points, its worst single-day performance since April 2025.
Sameer Samana, Head of Global Equity and Real Assets at Wells Fargo Investment Institute, noted: "The Fed remains patient and in a wait-and-see mode, continuing to monitor how the economy evolves over the coming months. This makes the September meeting a 'live' opportunity for the Fed to act, should incoming data support easing rising inflation pressures."
Investors digested several key economic releases on Thursday. Gross Domestic Product (GDP) grew at a tepid 1.5% in the second quarter, according to the Bureau of Labor Statistics, missing the 1.8% forecast from economists polled by Dow Jones and down from a 2.1% pace in the first quarter. The Personal Consumption Expenditures (PCE) price index fell 0.1% month-over-month on a seasonally adjusted basis, bringing the annual inflation rate to 3.7%, in line with expectations. Excluding food and energy, core PCE rose 0.1% month-over-month and 3.3% year-over-year, compared to forecasts of +0.2% and +3.3%, respectively. Initial jobless claims for the week ending July 25 totaled 197,000, an increase of 9,000 from the prior week's revised level, as reported by the Labor Department.
One of the busiest corporate earnings weeks of the quarter continued, with Bristol-Myers Squibb reporting results before the opening bell. Amazon.com, Apple, and Coinbase are scheduled to post their quarterly figures after the market close.
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