U.S. stock indices surged on July 30, driven by a more than 15% jump in Microsoft shares, which eased concerns over artificial intelligence (AI) investments and attracted strong buying interest in semiconductor stocks that had recently declined.
The Dow Jones Industrial Average closed up 613.92 points, or 1.19%, at 52,208.06. The S&P 500 rose 121.48 points, or 1.66%, to finish at 7,437.63, while the tech-heavy Nasdaq Composite soared 679.24 points, or 2.78%, to close at 25,122.18. Among the 11 sectors of the S&P 500, seven posted gains, with technology stocks leading the way with a 5.2% increase.
Microsoft was the primary driver of the market's rise, with its stock experiencing its largest single-day gain in 18 years. The company's market capitalization increased by approximately $450 billion in one day, marking the largest single-company increase in U.S. stock market history.
The surge followed Microsoft's announcement of better-than-expected revenue and positive growth projections for its cloud business, along with lower-than-anticipated capital expenditures. This raised investor confidence that the company could maintain its revenue and cash generation capabilities despite significant AI investments. Concerns over 'AI overinvestment,' which had intensified due to large-scale AI investments by Alphabet and Tesla and deteriorating cash flows, also eased somewhat.
Semiconductor stocks rebounded sharply, with the Philadelphia Semiconductor Index climbing 8.2%. Micron Technology surged 18%, SanDisk jumped 26%, and AMD rose 13%. The recent decline in semiconductor stocks, driven by concerns over AI investment burdens and advancements by Chinese semiconductor firms, attracted a wave of bargain hunting.
In contrast, Meta Platforms faced a decline as AI investment pressures resurfaced. The company's free cash flow for the second quarter plummeted 91% year-over-year to $784 million, impacted by substantial investments in data centers and AI infrastructure.
Concerns over potential interest rate hikes from the U.S. Federal Reserve persisted, with the yield on 30-year Treasury bonds soaring to 5.2444%, the highest level in nearly 19 years. The yield on 10-year Treasury bonds also rose to around 4.67%.
However, market fears regarding interest rate hikes eased slightly compared to the previous day. According to the CME FedWatch Tool, the market's expectation for a rate hike at the September Federal Open Market Committee meeting dropped to 59%, down from 82% a week earlier.
Economic indicators released that day also helped alleviate some rate hike concerns. The Personal Consumption Expenditures (PCE) price index for June rose 3.7% year-over-year, slowing from 4.1% in May. The core PCE price index, excluding volatile food and energy prices, recorded a 3.3% increase.
In the second quarter, the U.S. gross domestic product (GDP) grew at an annualized rate of 1.5%, falling short of the market forecast of 2.1%. However, consumer spending increased by 3.2%, and business investment in equipment rose by 15.2%, indicating relatively robust domestic demand.
International oil prices fell amid concerns over recent surges and efforts to enhance safety in Middle Eastern shipping routes. Brent crude settled at $89.03 per barrel, while West Texas Intermediate (WTI) closed at $83.59.
After the market close, Amazon reported its earnings, rising about 8% in after-hours trading. Amazon Web Services (AWS) saw a 37% increase in second-quarter revenue, reaching $42.2 billion, significantly exceeding expectations. In contrast, Apple reported revenues and net income that surpassed market forecasts, but its services segment fell short of expectations, leading to a roughly 4% decline in after-hours trading.
* This article has been translated by AI.
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