Nasdaq Soars 2.54% as Microsoft Jumps 15%; S&P 500, Dow Rebound After Fed-Led Selloff

Mumbai, July 30: US stock markets staged a sharp recovery in early trading on Thursday, rebounding from the previous session’s steep losses triggered by the Federal Reserve’s decision to hold interest rates steady. The tech-heavy Nasdaq Composite led the rally, surging 620.28 points (2.54%) to 25,063.22, while the S&P 500 advanced 96.42 points (1.32%) to 7,412.57, and the Dow Jones Industrial Average gained 346.74 points (0.67%) to 51,940.88 as of 10:02 AM EDT. The rebound was fueled by a stellar earnings report from Microsoft (MSFT), whose shares spiked over 15%, and a broad-based recovery in semiconductor stocks, which had been hammered in the prior session. 

Microsoft’s Azure Cloud Revenue Jumps 43%; Stock Surges 15% After Q4 Beat 

The primary catalyst for Thursday’s market resurgence was Microsoft’s fiscal fourth-quarter results, which comfortably exceeded Wall Street expectations. The tech giant reported quarterly revenue of $90.01 billion, surpassing the consensus estimate of $87.62 billion, while adjusted earnings per share came in at $4.74, against expectations of $4.25. The company’s Intelligent Cloud segment, a key barometer of its AI-driven growth, generated revenue of $39.3 billion, approximately $1 billion above analyst forecasts, as Azure and other cloud services revenue surged 43% year-over-year.  

Net income for the quarter stood at $35.77 billion, or $4.81 per share, a significant increase from $27.23 billion, or $3.65 per share, in the same quarter a year ago. Microsoft also disclosed a $3.2 billion gain from its investment in artificial intelligence lab Anthropic, alongside lower-than-expected costs related to its voluntary retirement programme. The company’s quarterly capital expenditures surged 70% to $41 billion, reflecting its aggressive investment in AI infrastructure. JPMorgan analysts noted that Microsoft’s results stand out among big tech companies in terms of its ability to balance revenue growth while managing profit margins. 

Meta Platforms Plunges 9.47% as AI Costs Crush Profit; Free Cash Flow Dives 91% 

In stark contrast, Meta Platforms (META) emerged as one of the session’s biggest losers, with its stock tumbling 9.47% in early trading. The social media giant reported second-quarter earnings per share of $6.18, missing the $7.19 consensus estimate, despite posting record revenue of $60.80 billion. The earnings miss was attributed to a 55% surge in costs, driven by the company’s continued heavy investment in AI infrastructure.  

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Meta also incurred $2.40 billion in charges tied to legal proceedings and $1.18 billion related to severance expenses following the layoff of 8,000 employees in May. Most notably, the company’s free cash flow plummeted 91% to $784 million, raising concerns about its ability to recoup massive AI investments. Meta’s revenue guidance for the current quarter came in at a midpoint of $62.5 billion, below analysts’ expectations of $63.15 billion. Goldman Sachs analysts described the results as “not quite the outsized positive returns that had been expected” from AI spending. 

Semiconductor Stocks Rebound Sharply; iShares Semiconductor ETF Jumps Over 7% 

The semiconductor sector, which suffered a brutal selloff on Wednesday, staged a powerful comeback on Thursday. The iShares Semiconductor ETF (SOXX) surged more than 7% in early trading, while the Philadelphia Semiconductor Index (SOX) rebounded sharply after falling over 5% in the previous session. Memory chip stocks were among the biggest gainers, with Sandisk (SNDK) soaring 20.95%, Western Digital (WDC) jumping 16.37%, and Seagate Technology (STX) advancing 15.78%. Other semiconductor heavyweights also posted strong gains: Lam Research (LRCX) surged 20.20%, Applied Materials (AMAT) rose 14.66%, Micron Technology (MU) gained 13.18%, and Advanced Micro Devices (AMD) climbed 12.35%. The sector’s recovery was underpinned by Microsoft’s robust Azure growth, which signaled sustained demand for AI-related computing capacity. 

US Economic Growth Slows to 1.5% in Q2, Missing Estimates; PCE Inflation Cools to 3.7% 

Investors also digested a mixed bag of economic data released on Thursday morning. The US economy grew at an annualised rate of 1.5% in the second quarter, according to the Bureau of Economic Analysis, falling short of the 1.8% consensus estimate and marking a slowdown from the 2.1% growth recorded in the first quarter. The slowdown was partly attributed to a surge in imports, which subtract from GDP calculations, reflecting increased spending on imported computer equipment driven by the AI investment boom. 

Also Read: How to Invest in S&P 500 Stocks Through Index Funds

Meanwhile, the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, showed inflation cooling in June. Headline PCE rose 3.7% year-over-year, down from 4.1% in May and in line with expectations. Core PCE, which excludes volatile food and energy prices, increased 3.3% annually, slightly down from 3.4% in May and matching forecasts. On a monthly basis, core PCE rose 0.1%, below the 0.2% estimate. The data suggested that inflationary pressures are gradually easing, although they remain well above the Fed’s 2% target. 

Jobless Claims Rise to 197,000; 30-Year Treasury Yield Hits 19-Year High 

Initial jobless claims for the week ending July 25 rose to 197,000, an increase of 9,000 from the prior week’s revised level, but came in below the 200,000 consensus estimate. Continuing claims fell to 1.782 million, below expectations of 1.795 million. The labour market data pointed to continued resilience despite the slowing economic growth. 

In the bond market, the 30-year Treasury yield surged to near 5.24%, its highest level since 2007, following the Federal Reserve’s decision on Wednesday to hold rates steady. The yield curve’s steepening reflected investor concerns that the Fed may be falling behind the curve in its fight against inflation. The 10-year Treasury yield was trading at 4.67%, slightly down from Wednesday’s close of 4.68%. 

Dow Jones Industrial Average Rises 0.67%; Caterpillar, Goldman Sachs Lead Gains 

The Dow Jones Industrial Average opened 0.64% higher at 51,918.60 and continued its upward trajectory, reaching 51,940.88 by mid-morning. Caterpillar (CAT) was the top performer on the Dow, surging 4.19%, followed by Goldman Sachs (GS), which gained 3.18%. Boeing (BA) also contributed to the index’s gains, rising 2.17%. On the downside, Salesforce (CRM) tumbled 5.55%, while Johnson & Johnson (JNJ) fell 3.53% and Travelers (TRV) dropped 3.32%. The Dow’s recovery followed its worst single-day decline since April 2025, when it plunged over 1,100 points on Wednesday. 

S&P 500 Advances 1.32%; Technology and Consumer Discretionary Lead Sector Gains 

The broader S&P 500 opened 1% higher at 7,385.30 and climbed to 7,412.57, with gains concentrated in the technology and consumer discretionary sectors. The information technology sector surged 4%, while consumer discretionary added 1.3%. However, market breadth was narrow, with only 243 gainers out of 500 stocks shortly after the open, and just five of 11 sectors trading in positive territory. Among the top performers on the S&P 500 were Lam Research (LRCX), up 20.20%, Sandisk (SNDK), soaring 20.95%, and Western Digital (WDC), jumping 16.37%. Microsoft (MSFT) added 15.10%, while Advanced Micro Devices (AMD) rose 12.35% and Micron Technology (MU) gained 13.18%. On the losing side, Meta Platforms (META) plunged 9.47%, Intuit (INTU) fell 6.97%, and Adobe (ADBE) declined 6.60%. 

Nasdaq Composite Surges 2.54%; Tech Giants and Semiconductors Fuel Rally 

The Nasdaq Composite opened 1.54% higher at 24,819.37 and accelerated its gains to reach 25,063.22, led by a broad-based rally in technology and semiconductor stocks. Microsoft (MSFT) was the standout performer, surging 15.10%, while Amazon (AMZN) gained 4.60% ahead of its earnings report after the close. Tesla (TSLA) added 2.98%, and Nvidia (NVDA) rose 2.93%. The semiconductor sector’s recovery was a key driver, with Lam Research (LRCX) jumping 20.20%, Applied Materials (AMAT) rising 14.66%, and Micron Technology (MU) gaining 13.18%. However, Meta Platforms (META) was a major drag on the index, plunging 9.47%, while Netflix (NFLX) fell 3.88% and Qualcomm (QCOM) declined 3.96%. The Nasdaq’s rebound followed its entry into correction territory on Wednesday, when the Nasdaq-100 fell more than 10% from its recent peak. 

Other Key Indices: Russell 2000, S&P MidCap 400, and NYSE Composite 

Beyond the major indices, other key benchmarks also participated in the recovery. The Russell 2000 index, which tracks small-cap stocks, opened higher, reflecting broad-based buying interest. The S&P MidCap 400 and S&P SmallCap 600 indices also moved higher, although specific opening figures were not immediately available. The NYSE Composite index, which includes all common stocks listed on the New York Stock Exchange, advanced in tandem with the broader market. The Dow Jones Transportation Average and Dow Jones Utility Average also posted gains, recovering from Wednesday’s selloff driven by rising fuel costs and concerns over global trade flows. 

Stellantis Reports Profit Surge but Reaffirms Guidance; Stock Falls 4.74% 

Stellantis (STLA), the parent company of Jeep and Ram, reported a sharp increase in first-half profit and sales, but its stock fell 4.74% in early trading as the company only reaffirmed its previous full-year guidance. For the half, Stellantis reported revenue of €81.61 billion ($93.20 billion), up 10% year-over-year and above the €80.71 billion consensus estimate. Adjusted operating income more than tripled to €1.733 billion ($1.98 billion), compared to €540 million ($614 million) a year ago. However, the company confirmed its prior 2026 guidance, projecting net revenues to rise in the mid-single digits and a low-single-digit adjusted operating income margin. The company estimated a net tariff headwind of €1.0 to 1.2 billion ($1.14 billion – 1.37 billion) for the year. 

Anheuser-Busch InBev Falls 3% Despite Strong Q2 Results; Market Awaits Amazon and Apple Earnings. 

Anheuser-Busch InBev (BUD) shares fell 3% in premarket trading, despite reporting better-than-expected second-quarter results. The Budweiser parent posted underlying earnings of $1.21 per share on revenue that increased 5.6% year-over-year to $16.66 billion, exceeding analyst estimates of $1.10 per share and $16.40 billion. However, the company merely affirmed its full-year EBITDA outlook of 4% to 8% growth, which may have disappointed investors seeking an upward revision. The stock had already gained 33% year-to-date entering the session. 

Also Read: What is NASDAQ? Meaning, How It Works and How to Invest in NASDAQ from India

Investors are now turning their attention to two more Magnificent Seven tech giants, Amazon (AMZN) and Apple (AAPL), which are scheduled to report their quarterly results after the closing bell on Thursday. Amazon shares were trading more than 3% higher in pre-market trading, while Apple shares edged lower. The focus will be on Amazon’s cloud business and capital expenditure plans, while Apple’s margins will be scrutinised amid memory chip price hikes. 

Geopolitical Tensions and Oil Prices Add to Market Uncertainty 

Geopolitical risks continued to weigh on investor sentiment, as US forces launched retaliatory strikes against a dozen Iranian targets overnight, threatening to escalate the conflict in the Middle East. Oil prices, which had surged on Wednesday, eased slightly on Thursday, with US benchmark West Texas Intermediate futures down 1.2% at $83.45 a barrel, while global benchmark Brent crude futures declined 1.5% to $89.35. The potential for further escalation in the Iran war remains a key risk factor that could reignite inflationary pressures and disrupt global energy markets. 

The divergence in AI investment strategies between Microsoft and Meta highlights the varying outcomes of aggressive capital expenditure. Microsoft’s Azure growth acceleration validates its spending, while Meta’s profit squeeze underscores execution risks. The mixed economic data—slowing GDP growth alongside cooling inflation—presents a complex picture for the Federal Reserve’s policy path. Investors should monitor upcoming earnings from Amazon and Apple for further clues on AI demand and consumer spending trends, while also tracking geopolitical developments and bond market movements for potential market impacts. 

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