Microsoft Leads US Stocks Higher Amid AI Optimism and Inflation Worries
US stocks rebounded strongly on Thursday, led by Microsoft's best day since 2008. The tech giant's stock surged 15.5% after reporting a stronger profit for its latest quarter than analysts expected. This growth was particularly strong in the Azure cloud business, with CEO Satya Nadella attributing it to customers using Microsoft to move into AI.
The S&P 500 rallied 1.7%, recovering from its worst drop in seven weeks the day before. The Dow Jones Industrial Average jumped 613 points, or 1.2%, while the Nasdaq composite, which is full of artificial-intelligence stocks, rose 2.8%. Microsoft's strong performance was a key driver of this rebound, but other tech companies also gained ground.
Chipmakers Micron Technology and Lam Research led the way, rising 18.4% and 18%, respectively. They trimmed their losses for the week to 5% and provided some relief to investors who had been worried about the sharp recent decline in their stock prices. Advanced Micro Devices also rallied 13%.
In contrast, Meta Platforms fell 8% after reporting a weaker profit for its latest quarter than analysts expected, despite making slightly more revenue. The company raised the lower end of its forecasted range for spending on investments this year, fueling concerns that AI spending is eating into companies' cash flows and may not be worth it in the long run.
Worries about inflation also lingered in the bond market. Despite some signs that higher interest rates could help keep a lid on inflation, yields on longer-term Treasuries held steady after sharp accelerations earlier this week. This reflected concerns that the Federal Reserve may not be prepared to act if inflation worsens or relies too heavily on financial markets to achieve its goals.