US STOCKS-Wall Street jumps as Microsoft sees biggest leap since 2008

Fair Isaac

30/07/2026 19:26

Updates with afternoon trading
Microsoft soars after forecasting upbeat sales, cloud growth
Meta drops after second-quarter free cash flow plunges 91%
Traders trim Sept rate hike expectations
S&P 500 +1.45%, Nasdaq +2.53%, Dow +1.02%
By Noel Randewich
July 30 (Reuters) - Wall Street rallied on Thursday, with chip stocks soaring and Microsoft on track for its biggest daily percentage gain in 18 years after the technology giant gave a stellar forecast that eased fears about massive spending on AI infrastructure.
Microsoft MSFT.O jumped 17%, boosting its stock market value by almost $500 billion, after the technology company forecast quarterly sales and cloud growth above expectations. It also reported capital expenditures below estimates and said it expects to keep generating cash through its fiscal 2027 that has just begun.
 This year, investors have been spooked by heavy spending on AI at big technology firms. Negative cash-flow reports from Alphabet GOOGL.O and Tesla TSLA.O last week sparked a bout of selling in AI-linked stocks, with chip stocks also under pressure as investors questioned high valuations.
Meta Platforms META.O tumbled 9% after the social media heavyweight reported a 91% drop in second-quarter free cash flow, indicating the financial strain of its costly AI buildout.
"These are true battleground stocks. Investors can't make up their minds whether the ROI on the massive capex spending is going to be worthwhile or not," said Jed Ellerbroek, portfolio manager at Argent Capital Management.
 "Microsoft delivered yesterday, and maybe Microsoft is going to be able to move itself from the 'battleground' camp to be a 'trusted AI winner' stock," Ellerbroek said. 
 The PHLX chip index .SOX surged almost 8%, with Micron Technology jumping 18%, Sandisk SNDK.O soaring 24% and Advanced Micro Devices AMD.O up 14%.
 Amazon AMZN.O rose 4% and Apple AAPL.O dipped 2%, with both companies set to report their results after the market closes.
 Amazon's stock has underperformed the broader market this year due to concerns about heavy spending on AI. Apple AAPL.O, which has not spent heavily on AI, recently overtook Nvidia NVDA.O to become the world's most valuable company, with a market value of $4.9 trillion.
 The S&P 500 jumped 1.45% at 7,421.97 points. The Nasdaq gained 2.53% to 25,060.99 points, while the Dow Jones Industrial Average was up 1.02% at 52,122.78 points.
 On Wednesday, U.S. stocks closed sharply lower after the Federal Reserve left interest rates unchanged, with mixed messages from new Fed Chair Kevin Warsh leaving traders confused about the path of borrowing costs.
Bond markets remained on edge, with the yield on the 30-year Treasury bond US30YT=RR surging to its highest level in 19 years. 
Traders are now only pricing in a 59% chance for a rate hike at the Fed's September meeting, according to CME FedWatch, down from 82% a week ago. 

     U.S. economic growth slowed in the second quarter as the trade deficit widened. The economy grew at a 1.5% rate, slower than estimates of 2.1% growth, data showed. A separate reading also showed U.S. inflation slowed in June. 
Qualcomm QCOM.O fell 2.3%, as the chipmaker forecast fourth-quarter profit below estimates and said revenue from Apple products would decline faster than expected.
Fair Isaac FICO.N slumped 16%. Even though the credit-scoring giant lifted its annual profit and revenue forecasts, they remained below analysts' estimates.
Starbucks SBUX.O rose 2.3% after the world's largest coffee chain raised its annual sales and profit forecasts.
Even though Microsoft lifted the S&P 500, declining stocks outnumbered rising ones in the benchmark index .AD.SPX by a 2.0-to-one ratio. 
 The S&P 500 posted 4 new highs and 4 new lows; the Nasdaq recorded 58 new highs and 126 new lows. 

(Reporting by Sruthi Shankar, Shashwat Chauhan and Ragini Mathur in Bengaluru, and by Noel Randewich in San Francisco; Editing by Devika Syamnath, Maju Samuel and David Gregorio)
((noel.randewich@thomsonreuters.com))