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Update: US Equity Indexes Surge as Microsoft Triggers Rebound in Chipmakers While Inflation Rate Falls in June

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(Updates with index/price moves, macroeconomic data, and company/geopolitical news from the first paragraph.)

US equity indexes soared Thursday as semiconductors rebounded after Microsoft's (MSFT) quarterly results revealed evidence of AI monetization and a closely watched inflation gauge showed a decline for June.

The Nasdaq Composite catapulted 2.8% to 25,122.18, the S&P 500 jumped 1.7% to 7,437.63, and the Dow Jones Industrial Average climbed 1.2% to 52,208.06.

Technology was the standout gainer, up 5.2%, followed by consumer discretionary. Communication services, consumer staples, and health care led the decliners.

Microsoft's intelligent cloud segment revenue surged 32% to $39.31 billion, buoyed by an astounding 43% growth in Azure and other cloud services. Analysts expected a 40% year-over-year advance in Azure sales. Shares of Microsoft shot up 16%, one of the top gainers in the S&P 500, Nasdaq, and the Dow.

"This was another standout quarter by Nadella & Co. with triple-digit AI [annual recurring revenue] growth and accelerating Azure trajectory into the end of FY26, reinforcing that any knee-jerk reactions to the elevated capex framework represent strong buying opportunities as Redmond's structural AI moat only widens from here," Dan Ives, global head of technology at Wedbush Securities, said in a note.

Arm (ARM) shares rose 6.2% after the semiconductor group reported a fiscal Q1 beat for adjusted earnings and revenue.

A consortium of banks led by Morgan Stanley (MS) is in talks to lend $15 billion to a data-center developer to build a campus and power plant for Anthropic in Texas, The Wall Street Journal reported Thursday, citing people familiar with the matter. Alphabet's (GOOG, GOOGL) Google would provide financial guarantees and chips for the project. The deal could be announced as soon as today, the report said.

VanEck Semiconductor ETF (SMH), with net assets of $77.2 billion, advanced 6.9%, as chipmakers are major beneficiaries of AI-related spending. Among companies with a market capitalization of more than $200 billion, six of the top 10 gainers on Thursday were from the semiconductors and semiconductor equipment and materials industries, according to data compiled by Finviz.

In economic news, the personal consumption expenditures, or PCE, price index fell 0.1% in June, as expected, cutting the year-over-year rate to 3.7% from 4.1%. The price index rose by 0.5% in May. The core PCE price index climbed 0.1% in June, below the 0.2% gain expected and following a 0.3% growth in May. The year-over-year rate dropped to 3.3% from 3.4%, according to the Bureau of Economic Analysis.

An advance BEA reading of gross domestic product showed 1.5% growth in Q2, after a 2.1% increase in Q1 and missing the 2.0% gain forecast in a Bloomberg-compiled survey.

US Treasury yields traded mixed, with the 10-year up 5.3 basis points to 4.68%.

In precious metals markets, gold futures jumped 1.9% to $4,173.5, and silver futures advanced 2.5% to $59.53.

The front-month US West Texas Intermediate was down 0.9% at $83.70 a barrel, while global benchmark North Sea Brent declined 1.8% to $89.15 a barrel.

Late Wednesday, US forces completed a "heavy wave" of strikes against Iran in response to Tuesday's attempted missile attacks on US forces, according to CENTCOM. Meanwhile, the Islamic Revolutionary Guard Corps targeted US bases in Kuwait and Jordan following Washington's strikes on Iran, Al Jazeera, a Middle East broadcaster, reported, citing the IRGC.

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Update: US Equity Indexes Slide as Divided Fed Reiterates Inflation Focus, Trump Vows to Hit Iran Hard in Retribution Move

(Updates with index/price moves and Federal Reserve/geopolitical news from the first paragraph.)US equity indexes sank as the Federal Reserve reiterated its unflinching focus on inflation after three dissenters accompanied the fifth consecutive policy hold and as President Donald Trump promised to hit Iran hard following Tehran's attack on regional neighbors.The Dow Jones Industrial Average plunged 2.2% to 51,594.14, with the Nasdaq Composite down 1.7% to 24,442.94 and the S&P 500 lower by 1.5% to 7,316.15 on Wednesday.All sectors declined, except energy, consumer staples, and communication services. Industrials, technology, and financials led the steepest decliners.The CBOE's volatility index VIX, also known as the fear gauge, surged 14% to 20.66.The Fed held its policy rate steady in a divided decision, as three officials called for policy tightening. The Federal Open Market Committee maintained the target range for the federal funds rate at 3.50% to 3.75%. The committee reiterated its pledge to "deliver price stability" as inflation remained above the 2% target amid supply shocks."Let me reiterate. There is no soft inflation target. There is no soft implicit target. Not on this committee's watch. There's only a target and it's 2%," Fed Chair Kevin Warsh said.Following the FOMC statement, the Fed Funds futures market shifted "slightly," Raymond James said in a note. For the December meeting, the probability of an unchanged Fed Funds rate decreased to 8.4% on Wednesday from 11.0% on Tuesday; the probability of a 25-basis-point increase in rates climbed to almost 92% from over 89%, and the likelihood of two 25-basis-point moves was little changed at 53.0%.A drone hit a US-owned gas storage tanker at Egypt's Mediterranean port of Damietta, British maritime security firm Ambrey said in an initial assessment on Wednesday, Reuters reported.President Donald Trump vowed to retaliate against Iran for firing on US troops days after he halted air strikes, the news report said. "So it's our turn," Trump was cited as saying at the White House. He said Washington would see if there was an agreement with Iran at some point, "but we're going to hit them very hard."Yemen's Houthi group is considering imposing fees on commercial ships sailing through the southern Red Sea, a week after declaring a naval blockade on Saudi Arabia, regional sources with knowledge of the matter told Reuters. The Red Sea chokepoint is a critical export route for Saudi crude as maritime traffic remains disrupted at the Strait of Hormuz, a waterway through which about a fifth of global oil and gas flows.The front-month US West Texas Intermediate jumped 6.8% to $84.66 a barrel and global benchmark North Sea Brent surged 7.8% to $90.66 a barrel after the US Central Command said it joined Saudi Arabian Armed Forces to conduct strikes in Iraq against Iran-aligned terrorists that the Islamic Revolutionary Guard Corps directed to attack US forces and Saudi energy infrastructure.US Treasury yields were mixed, with the 10-year surging 7.7 basis points to 4.68% while the two-year was little changed at 4.27%.In precious metal markets, gold futures climbed 0.7% to $4,066.1, and silver futures rose 0.6% to $57.84.

Dow JonesNasdaq CompositeS&P 500
Asia Markets

Update: US Equity Indexes Slump Ahead of Fed Policy Moves, Big-Tech Results; Crude Oil Soars as Trump Vows to Hit Iran Hard

(Updates with index/price moves and Fed/company/geopolitical news from the first paragraph.)US equity indexes fell amid expectations of a tightening bias from the Federal Reserve and as Iran's surprise missile attack on regional neighbors escalated war tensions ahead of big-tech quarterly results post-bell.The Dow Jones Industrial Average declined 1.4% to 51,986.1, with the Nasdaq Composite down 0.7% to 24,697.2 and the S&P 500 lower by 0.7% to 7,376.8 after midday Wednesday. All sectors except energy, consumer staples, and consumer discretionary declined. Industrials, materials, and technology led the steepest decliners.Microsoft (MSFT), Meta Platforms (META), Lam Research (LRCX), Arm (ARM), and Qualcomm (QCOM) will report earnings after the bell on Wednesday, and investors will focus on what these companies will say about capital expenditures related to artificial intelligence and the state of free cash flows.Among companies with a market capitalization of more than $200 billion, eight of the 10 worst intraday performers were from the technology sector, according to data compiled by Finviz. VanEck Semiconductor ETF (SMH), with net assets of $77.2 billion, slumped 3.1% after midday.The Fed is likely to remain on hold at the 3.5% to 3.75% target range in its Wednesday policy announcement, according to the CME FedWatch tool. However, the probability that the target rate for fed funds will increase to 4.25%-4.5% in December jumped to 17% as of Wednesday afternoon from 9% a month ago, implying a significant tightening bias among some market participants.The tightening bias may have to be communicated more subtly through a more casual or veiled tone, Thierry Wizman, global foreign-exchange and rates strategist at Macquarie, said in a note. Alternatively, Fed Chair Kevin Warsh may have to accommodate the views of the more hawkish majority in his press conference on Wednesday by making his views more strident about promoting price stability "without delay," he said."And if that isn't enough, the more hawkish bias will spill out more forcefully in the comments and appearances by Fed officials in the days after today's FOMC meeting," Wizman said in the note. "But one way or another - including, perhaps, through dissent - the Fed's emerging tightening bias will find its way into the market today or the next few days."In geopolitical news, President Donald Trump said Iran will be hit hard, according to Fox News.The US Central Command said it joined Saudi Arabian Armed Forces to conduct strikes in Iraq against Iran-aligned terrorists that the Islamic Revolutionary Guard Corps directed to attack US forces and Saudi energy infrastructure.The front-month US West Texas Intermediate jumped 6.8% to $84.63 a barrel, and global benchmark North Sea Brent surged 7.6% to $90.45 a barrel.US Treasury yields jumped, with the 10-year up 3.5 basis points to 4.64% and the two-year higher by 4.5 basis points to 4.32%.In precious metal markets, gold futures were steady at $4,039.2, and silver futures rose 0.8% to $57.99.

Dow JonesNasdaq CompositeS&P 500$ARM$LRCX$META$MSFT$QCOM$SMH
Asia Markets

Exchange-Traded Funds, US Equities Lower After Midday

Broad Market IndicatorsBroad-market exchange-traded funds IWM and IVV were lower. Actively traded Invesco QQQ Trust (QQQ) fell 1.4%.US equity indexes fell amid expectations of a tightening bias from the Federal Reserve and as Iran's surprise missile attack on regional neighbors escalated war tensions ahead of big-tech quarterly results post-bell.EnergyIShares US Energy ETF (IYE) and the State Street Energy Select Sector SPDR (XLE) rose about 2.1% each.TechnologyThe State Street Technology Select Sector SPDR ETF (XLK) shed 1.8%; iShares US Technology ETF (IYW) fell 1.4%, and iShares Expanded Tech Sector ETF (IGM) was down 1.5%.The State Street SPDR S&P Semiconductor (XSD) slipped 4.4%, and iShares Semiconductor (SOXX) fell 4.5%.FinancialThe State Street Financial Select Sector SPDR (XLF) dropped 0.9%. Direxion Daily Financial Bull 3X Shares (FAS) declined 2.6%, and its bearish counterpart, Direxion Daily Financial Bear 3X Shares (FAZ), gained 2.5%.CommoditiesCrude oil gained 6.6%, and the United States Oil Fund (USO) increased 7%. Natural gas rose 0.8%, and the United States Natural Gas Fund (UNG) moved 1.6% higher.Gold on Comex fell 0.2%, and the State Street SPDR Gold Shares (GLD) increased 0.1%. Silver was up 1%, and iShares Silver Trust (SLV) gained 1.1%.ConsumerThe State Street Consumer Staples Select Sector SPDR (XLP) was up 0.7%. The Vanguard Consumer Staples ETF (VDC) added 0.6%, and iShares Dow Jones US Consumer Goods (IYK) was up 0.3%.The State Street Consumer Discretionary Select Sector SPDR (XLY) edged higher. VanEck Retail ETF (RTH) added 0.2%, and the State Street SPDR S&P Retail (XRT) gained 0.3%.HealthcareThe State Street Health Care Select Sector SPDR (XLV) fell 0.1%, while iShares US Healthcare (IYH) and Vanguard Health Care ETF (VHT) dropped 2% each. IShares Biotechnology ETF (IBB) was down 1%.IndustrialThe State Street Industrial Select Sector SPDR (XLI) slipped 2.8%. Vanguard Industrials Index Fund (VIS) was down 2.9% and iShares US Industrials (IYJ) declined 2%.CryptocurrencyIn midday activity, bitcoin (BTC-USD) fell 0.3%. Among cryptocurrency ETFs, ProShares Bitcoin ETF (BITO) was fractionally lower, ProShares Ether ETF (EETH) was down 1.4%, and ProShares Bitcoin & Ether Market Cap Weight ETF (BETH) was unchanged.

Dow Jones^EEM^EXI^FAS^FAZ^GLD^IBB^IGM^IGV^IPK^IVV^IWMNasdaq Composite^IYE^IYH^IYJ^IYK^IYW^PMR^QQQ^RTH^SOXXS&P 500^SPY^UNG^USO^VDC^VHT^VIS^XLE^XLF^XLI^XLK^XLP^XLV^XRT^XSD$BETH$BITO$EETH