(Bloomberg) — A rally in big tech drove stocks higher, with traders parsing the latest inflation and spending data illustrating the tug and pull that has Federal Reserve officials split over the course of monetary policy. Bond yields fell. The dollar rose for a sixth straight day.
Equities extended their July advance, with the S&P 500 set for its longest streak of monthly gains since September. The Nasdaq 100 rose about 1% as Microsoft Corp. briefly topped $4 trillion amid AI optimism. Meta Platforms Inc. jumped 12% after strong earnings. Fellow megacaps Apple Inc. and Amazon.com Inc.’s results are due after the close.
Subscribe to the Stock Movers Podcast on Apple, Spotify and other Podcast Platforms.
“The two tech giants didn’t merely beat expectations — they smashed them,” said Fawad Razaqzada at City Index and Forex.com.
Treasury 10-year yields fell two basis points to 4.35%. The dollar headed toward its best month in 2025. The yen slid as investors took comments from Bank of Japan Governor Kazuo Ueda to be less hawkish than expected.
The Federal Reserve’s preferred measure of underlying inflation accelerated in June to one of the fastest paces this year while consumer spending barely rose, underscoring the dueling forces dividing policymakers over the path of rates.
Markets have persevered through elevated interest rates several years now, and despite a bumpy start to 2025, the S&P 500 has jumped year to date, noted Bret Kenwell at eToro.
“Rate cuts are nice, but they are not necessary for US stocks to continue higher,” Kenwell said. “Instead, earnings continue to drive the narrative — and today that narrative is focused on Microsoft and Meta’s results — while forward expectations for S&P 500 earnings are back to record highs.”
On the trade front, Treasury Secretary Scott Bessent said that he’s set to discuss with President Donald Trump Thursday an extension of the tariff-hike truce with China, expressing confidence a settlement will be reached.
The core personal consumption expenditures price index rose 0.3% from May. It advanced 2.8% on an annual basis, a pickup from June 2024 that underscores limited progress on taming inflation in the past year.
“Inflation remains sticky and justifies the Fed’s decision to keep interest rates unchanged at Wednesday’s meeting,” said Clark Bellin at Bellwether Wealth. “The stock market doesn’t need rate cuts in order to move higher and has already posted strong gains so far this year without any rate cuts.”
As with so many things in the economy, the situation is very fluid and we have yet to see the full impact of tariffs flowing through to inflation, according to Chris Zaccarelli at Northlight Asset Management.
“The Fed is on hold (but has a bias to cut rates) and tech firms blowing out their earnings reports, so the market is poised to keep climbing,” he said. We are priced for perfection as they say, and that is a risk, but one that will likely be ignored by the market as long as corporate profits are still growing.”
Separate data Thursday showed initial jobless claims were little changed last week. Another report showed labor cost growth rose 3.6% from a year ago, matching the lowest since 2021, reassuring Fed officials that the job market isn’t a source of inflationary pressure.
The market’s attention will soon turn to Friday’s jobs report for July, which is forecast to show companies are becoming more deliberate in their hiring. Employment likely moderated after a June increase, while the unemployment rate is seen ticking up to 4.2%.
Private payrolls are projected to rise by 100,000 after the smallest advance in eight months.
President Trump resumed his criticism of Fed Chair Jerome Powell after the central bank declined to cut interest rates, ending a short-lived détente.
Trump’s comments come after Fed officials left interest rates unchanged on Wednesday but downgraded their view of the US economy, signaling that policymakers could be edging closer to lowering borrowing costs.
Corporate Highlights:
Microsoft Corp. plans to spend over $30 billion in the current quarter to build out the data centers powering artificial-intelligence services. Its results suggested the firm, perhaps the most prodigious spender of the AI age, is starting to see a return in the form of rising sales. Meta Platforms Inc. topped projections for second-quarter sales and gave a stronger-than-expected forecast for the current period, a sign that the social media company’s advertising business is still growing quickly enough to support aggressive spending on artificial intelligence. Chinese authorities summoned Nvidia Corp. to discuss alleged security risks related to its H20 chips, casting doubt over the domestic business of the world’s most valuable company weeks after co-founder Jensen Huang met senior officials in Beijing. Qualcomm Inc., the biggest maker of chips that run smartphones, fell in late trading after reporting lackluster growth in that market, fueling concerns that tariffs will take a toll on the industry. Arm Holdings Plc, which provides the most widely used technology in computing chips, gave a lower-than-expected profit forecast for the current period after ramping up spending on new products. Mastercard Inc. reported earnings that topped estimates as spending on its network outpaced expectations and the company renewed its longtime partnership with American Airlines Group Inc. Ford Motor Co. said its profit this year is poised for a sharp drop on the growing fallout from President Donald Trump’s tariffs, underscoring the dramatic policy shifts in Washington that are upending the auto industry. Moderna Inc. is cutting about 10% of its workforce, part of an effort by the struggling biotech company to reduce spending as sales of its Covid vaccine decline. Bristol Myers Squibb Co. lifted its full-year guidance after beating Wall Street’s estimates on revenue and profit, burnishing the company’s efforts to return to consistent growth by the end of the decade. AbbVie Inc. raised its full-year profit forecast, thanks to booming sales from a pair of newer immunology drugs that beat Wall Street’s estimates. A trial of Eli Lilly & Co.’s blockbuster diabetes drug Mounjaro fell short of expectations that it would do a better job of preventing heart attacks and strokes than its older medicine Trulicity. Biogen Inc. raised its full-year financial guidance as growing sales of its Alzheimer’s drug helped the biotech company beat Wall Street’s expectations. CVS Health Corp. raised its profit guidance for the year after posting strong results in its health insurance and pharmacy businesses, an encouraging sign after a spate of missteps by rival insurers. Cigna Group reported second-quarter profit slightly ahead of analysts’ expectations and affirmed its outlook for the year, a sign of stability in a turbulent time for the broader health insurance sector. Lyft Inc. has gained the necessary regulatory clearance to complete its acquisition of European taxi app Freenow, setting the stage for the US rideshare company to expand its operations into Europe. Bombardier Inc. had its strongest quarter for business jet orders in over a decade and says it’s on track to meet its full-year guidance. Unilever Plc’s sales rose more than expected in the second quarter, driven by personal care brands such as Dove soap and a strong performance in the ice cream division it plans to spin off. Some of the main moves in markets:
Stocks
The S&P 500 rose 0.7% as of 10:29 a.m. New York time The Nasdaq 100 rose 0.7% The Dow Jones Industrial Average rose 0.1% The Stoxx Europe 600 fell 0.6% The MSCI World Index rose 0.3% Microsoft rose 4.8% Meta rose 12% Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro rose 0.2% to $1.1426 The British pound fell 0.2% to $1.3212 The Japanese yen fell 0.7% to 150.56 per dollar Cryptocurrencies
Bitcoin rose 0.7% to $118,011.65 Ether rose 0.2% to $3,775.29 Bonds
The yield on 10-year Treasuries declined two basis points to 4.35% Germany’s 10-year yield declined one basis point to 2.70% Britain’s 10-year yield declined four basis points to 4.57% The yield on 2-year Treasuries declined one basis point to 3.93% The yield on 30-year Treasuries declined two basis points to 4.88% Commodities
West Texas Intermediate crude fell 0.3% to $69.78 a barrel Spot gold rose 0.7% to $3,296.99 an ounce ©2025 Bloomberg L.P.