Wall Street rallied strongly on Thursday (Friday AEST) as a blockbuster forecast from Microsoft reignited investor confidence in artificial intelligence, driving a broad-based advance in technology and semiconductor stocks.
The Dow Jones Industrial Average rose 613.9 points, or 1.2%, to 52,208.1. The S&P 500 climbed 121.5 points, or 1.7%, to 7,437.6, while the Nasdaq Composite surged 679.2 points, or 2.8%, to 25,122.2.
Microsoft soared more than 15%, adding around US$450 billion to its market value in the largest single-day increase ever recorded by a Wall Street-listed company.
The software giant forecast quarterly sales and cloud computing growth ahead of market expectations. It also reported lower-than-expected capital expenditure and said it expects to continue generating cash throughout its 2027 financial year.
The upbeat outlook helped ease investor concerns over the significant investment required to build AI infrastructure.
Sentiment towards the sector had weakened after Alphabet and Tesla last week reported negative free cash flow, triggering a sell-off in AI-related stocks as investors questioned lofty valuations.
Chipmakers led the market higher, with Micron Technology jumping 18%, Sandisk soaring 26% and Advanced Micro Devices gaining 13%.
Amazon advanced 3.9%, while Apple slipped 1.4% ahead of their quarterly earnings releases after the closing bell.
Economic data showed the U.S. economy expanded at an annualised rate of 1.5% in the second quarter, below forecasts of 2.1%, as a widening trade deficit weighed on growth.
A separate report showed U.S. inflation eased 0.1% on a monthly basis in June, supporting expectations that price pressures continue to moderate.
Qualcomm fell 2.6% after forecasting fourth-quarter profit below analysts' expectations and warning that revenue from Apple products would decline faster than previously anticipated.
Starbucks rose 1.6% after the coffee chain lifted its full-year sales and profit guidance.
On the bond markets, 10-year and two-year Treasury yields fell 0.3% and 0.4% to 4.673% and 4.25%, respectively.
