Amazon Soars as Fed Falters: Stocks Close July on High Note

US stocks closed out a turbulent July on a positive note, with Amazon leading the charge and Apple falling short. The S&P 500 rose 0.7% after seesawing throughout the day, while the Dow Jones Industrial Average added 276 points (0.5%) and the Nasdaq composite rallied 1%. Amazon's 15.3% surge was driven by stronger-than-expected quarterly profits, more than tripling from last year due to accelerated growth in its cloud computing business.

Investors took this as a sign that Amazon's massive investments in artificial intelligence (AI) are paying off, and the company increased its forecast for AI-related spending. This echoes Microsoft's recent performance, which saw its stock skyrocket on similar signals of AI-driven profits. Chipmakers Micron Technology and others involved in supplying processors and computer memory to hyperscalers like Amazon and Microsoft experienced wild swings throughout the day.

Apple, however, bucked the trend with a 7.4% drop despite reporting stronger quarterly profits than expected. Its revenue growth forecast for the current quarter fell short of analyst predictions, attributed to supply chain constraints fueled by the AI boom. The war with Iran continued to weigh on oil prices, which rose another 1.2% to $87.93 per barrel.

The Federal Reserve's commitment to reigning in inflation remains unclear, despite Chairman Kevin Warsh's repeated promises to bring it back down to 2%. Economists at Bank of America warn that the Fed faces a credibility crisis unless they take decisive action in September, including interest rate hikes. Abroad, chip stocks saw even more extreme fluctuations, with Seoul's Kospi index soaring 17.9% for its best day ever.