Microsoft's best day since 2008 leads US stocks

NEW YORK (AP) — A monster day for Microsoft’s stock following signals that its big spending on AI is translating into profits led a powerful rebound on Wall Street Thursday, while computer-chip companies regained some of their sharp recent losses. In the bond market, though, worries remained about inflation potentially remaining high for years.

The S&P 500 rallied 1.7% and more than recovered its drop from the day before, which was its worst in seven weeks. The Dow Jones Industrial Average jumped 613 points, or 1.2%. The Nasdaq composite, which is full of artificial-intelligence stocks, rallied 2.8% a day after it fell 9.8% below its record set last month.

Microsoft led the way and leaped 15.5% for its best day in nearly 18 years after reporting a stronger profit for the latest quarter than analysts expected. Growth was strong for its Azure cloud business, and CEO Satya Nadella said it reflects how customers are using Microsoft to move into AI.

Perhaps just as importantly for Wall Street, Microsoft did not announce a big increase in how much it plans to spend on AI investments, something that several other Big Tech rivals have done. Worries are high that such spending is eating into companies’ cash flows and may not ultimately be worth it if AI does not produce as much productivity and profits as promised.

Meta Platforms helped demonstrate such fears after falling 8%. The parent company of Facebook and Instagram reported a weaker profit for the latest quarter than analysts expected, even though it made slightly more in revenue than expected. It also raised the lower end of its forecasted range for spending on investments this year.

Companies involved in the making of the computer memory and processors that such “hyperscalers” are buying to power their AI efforts rose Thursday, recovering some of the big losses they’ve taken on worries their stock prices shot too high in the euphoria around AI.

Micron Technology jumped 18.4%, for example, to trim its loss for the week to 5%. It was the strongest force lifting the S&P 500 after Microsoft.

Lam Research, a supplier to the semiconductor industry, soared 18% after reporting stronger profit and revenue for the latest quarter than analysts expected. Chip giant Advanced Micro Devices rallied 13%.

On the losing end of Wall Street was Jersey Mike’s Subs. The sandwich chain’s stock fell 6% in its first day of trading on the New York Stock Exchange.

All told, the S&P 500 rose 121.48 to 7,437.63. The Dow Jones Industrial Average climbed 613.92 to 52,208.06, and the Nasdaq composite leaped 679.24 to 25,122.18.

In the bond market, longer-term Treasury yields held steadier following their sharp accelerations Wednesday. They had jumped after the chairman of the Federal Reserve, Kevin Warsh, gave few clues about what the central bank will do with interest rates to combat the painfully high inflation that continues to hurt the country.