Microsoft Lifts Wall Street as Inflation Worries Remain

Microsoft's stock surged 16.5% on Thursday, leading a rebound on Wall Street after the company reported stronger-than-expected profits. The S&P 500 index rallied 1.8%, recovering its drop from the previous day, while the Dow Jones Industrial Average rose 648 points or 1.3%. Microsoft's Azure cloud business saw growth, and CEO Satya Nadella attributed this to customers increasingly using the platform for artificial intelligence.

The tech giant's results were seen as a positive signal that its large investments in AI are paying off without significantly straining its cash flow. This contrasts with other Big Tech companies like Meta Platforms, which fell 8.6% after reporting weaker-than-expected profits and increasing its forecasted investment spending.

The bond market remained concerned about inflation, however, as longer-term Treasury yields steadied following sharp accelerations the previous day. The chairman of the Federal Reserve, Kevin Warsh, reaffirmed that the central bank aims to bring inflation back down to 2%, but investors question whether the Fed is prepared to act if inflation worsens.