Wall St advances as Microsoft results ease AI spending fears

Apple AAPL.O and Amazon AMZN.O are scheduled to report earnings after the bell. Amazon was up 4.4%, while Apple was down 2%. On the data front, U.S. economic growth slowed in the second quarter amid a widening in the trade deficit, increasing at a 1.5% rate versus estimates of 2.1% growth. A separate reading also showed U.S. inflation slowed in June. “As Fed Chair (Kevin) Warsh stated yesterday, though, one month of good inflation data is not good enough when it comes to resting easy about inflation,” said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research. At 11:30 a.m. ET, the Dow Jones Industrial Average .DJI rose 125.92 points, or 0.25%, to 51,723.73, the S&P 500 .SPX gained 56.84 points, or 0.78%, to 7,372.99, and the Nasdaq Composite .IXIC gained 475.49 points, or 1.95%, to 24,919.96. Eight of the 11 S&P sectors were trading lower, though technology's .SPLRCT 4.2% jump offset weakness in the broader index. Chip stocks soared, with the Philadelphia chips index .SOX up 7.3% and set to snap a five-day losing streak. Markets closed sharply lower on Wednesday after the Fed left interest rates unchanged in the 3.50% to 3.75% range, but mixed messages from new Fed Chair Kevin Warsh left traders confused about the path of borrowing costs. Bond markets were on edge, with the yield on the 30-year Treasury bond US30YT=RR surging to its highest level in 19 years. Traders currently see a 57% chance that the U.S. central bank will raise interest rates by 25 basis points at its September meeting, according to LSEG-compiled data. Qualcomm QCOM.O fell 3.1%, 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 was up 1.3% after the world's largest coffee chain raised its annual sales and profit forecasts. Advancing issues outnumbered decliners by a 1.01-to-1 ratio on the NYSE and by a 1.38-to-1 ratio on the Nasdaq. The S&P 500 posted three new 52-week highs and four new lows, while the Nasdaq Composite recorded 47 new highs and 110 new lows. U.S. stocks gained on Thursday as Microsoft's stellar forecasts soothed concerns about massive AI spending by companies, while investors also parsed fresh GDP and inflation data a day after the Federal Reserve's rate decision. Microsoft MSFT.O jumped around 14% after the company forecast current-quarter sales and cloud growth above expectations, capital expenditure below estimates and said it expects to keep generating cash through its fiscal 2027 that just began. Investors have been spooked by rising AI costs at big technology firms even as they report strong earnings. 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 coming under pressure as investors questioned high valuations. The tech-heavy Nasdaq-100 .NDX dropped 10% from its early June peak on Wednesday. In a sign that AI concerns were far from over, Meta Platforms META.O shed 9%, as the social media giant reported a 91% drop in second-quarter free cash flow, underscoring the financial strain of its costly AI buildout. “The real question is not whether AI creates value — it is who can stay at the very top of the capability race,” said Laurent Clavel, global head of multi-asset at AXA IM.

Wall St advances as Microsoft results ease AI spending fears

Apple and Amazon earnings due after the bell

GDP, inflation and rate expectations remain in focus

Company movers include Qualcomm, Fair Isaac and Starbucks

Wall Street advances after Microsoft eases AI spending concerns

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