Big Tech Boosts Stocks Amid AI Spending Binge and Soaring Oil Prices
US stocks closed out a volatile month of July on a high note, with the Dow Jones Industrial Average and S&P 500 rising by more than 0.5%. The tech-heavy Nasdaq Composite gained roughly 1%, capping off a week and month of gains for all three major averages.
The market's upward momentum was fueled in part by earnings reports from Big Tech giants, including Amazon and Microsoft. Amazon stock jumped 15% after the e-commerce giant beat expectations with its quarterly results, while Microsoft saw its stock rally by 15% on Thursday following its own strong earnings report.
Microsoft's historic 15% stock gain was one of several encouraging signs for tech investors, who had grown concerned about a slowdown in artificial intelligence spending due to higher interest rates. However, the latest quarterly results from the 'Magnificent Seven' companies showed that Big Tech continues to invest heavily in AI, with the four hyperscalers - Amazon, Microsoft, Meta, and Alphabet - forecasting cumulative spending of $720 billion to $745 billion on capital projects in 2026.
Meanwhile, oil prices rose as tensions in the Strait of Hormuz flared up again, pushing US benchmark WTI crude futures up to around $85 per barrel and global benchmark Brent futures to $90 per barrel. Higher energy and gas prices have been weighing heavily on consumers' budgets, contributing to depressed sentiment.