Microsoft Earnings Boost Tech Stocks as Oil Prices Retreat

US stocks rebounded strongly on Thursday as Microsoft's blowout earnings report lifted tech shares by more than 15%. The Nasdaq index surged 2.8% to lead the major US indices, while the S&P 500 and Dow Jones also rose.

The surge in Microsoft shares was driven by strong results from its cloud and artificial intelligence divisions. This came as a welcome respite for tech companies after a difficult July, during which the Nasdaq saw huge second-quarter gains.

Analysts pointed to moderating oil prices as another factor supporting equities. The comments from Pakistan suggesting ongoing negotiations between Iran and the US also eased concerns about escalating tensions in the region.

Federal Reserve Chair Kevin Warsh's press conference on Wednesday had sparked worries about higher US Treasury yields, but futures markets showed rising confidence that the Fed will hike rates later this year. The Bank of England kept its benchmark rate unchanged on Thursday, warning that UK inflation would rise again due to elevated energy prices.

On Wall Street, other major tech companies including Meta saw their shares fall as investors remained cautious about soaring valuations in the sector. However, analysts said the Microsoft earnings provided reassurance on this question, indicating that traders are still differentiating between companies.