Stock Market Today: Tech-Led Rally Powers S&P 500 as Microsoft Soars, Chip Stocks Surge

 Stock Market Today: Tech-Led Rally Powers S&P 500 as Microsoft Soars, Chip Stocks Surge

**Investors shrugged off the Fed's hawkish hold and the ongoing chip selloff, focusing instead on Microsoft's AI-driven quarter and cooling inflation data.**

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## The Headline: A Relief Rally with Staying Power

The stock market delivered a powerful rebound on Thursday, July 30, 2026, as investors digested a deluge of Big Tech earnings and an encouraging inflation report. The S&P 500 jumped 1.6%, the Nasdaq surged 2.3%, and the Dow Jones Industrial Average rose 250 points, or 0.5%, to 52,790.

The tech sector led the charge, with Microsoft shares soaring more than 11% after the company reported record quarterly results and a disciplined AI spending strategy that stood in stark contrast to Meta and Alphabet. The rebound wasn't confined to Microsoft: chip stocks bounced back after a brutal stretch, with the VanEck Semiconductor ETF (SMH) rising more than 4%.

At the heart of the rally was a simple realization: **Microsoft's AI spending is driven by real customer demand, not a speculative arms race.** While Meta's stock tumbled 10% after the bell on Wednesday following a profit miss, and Alphabet was still digesting a 6% decline from its own AI spending concerns, Microsoft proved that AI can be a profitable business today, not just a promise for tomorrow.

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## The Microsoft Effect: A $300 Billion Market Cap Swing

Microsoft's Q4 earnings report was the catalyst for Thursday's tech rally. The company reported:

- **Revenue**: $90.01 billion, up 18% year-over-year

- **Adjusted EPS**: $4.74, beating the $4.24 consensus

- **Azure growth**: 43%, accelerating from 40% in the previous quarter

- **Capital expenditures**: $41 billion (including leases), below the anticipated $42 billion

The crucial signal came from management's guidance: **Microsoft's calendar 2026 capex expectations remain unchanged at roughly $175 billion** after an accounting adjustment. That message was starkly different from Alphabet and Meta, which raised their spending forecasts and were punished by investors.

By midday Thursday, Microsoft's market cap had surged roughly **$300 billion** from its post-earnings close. The stock was trading above $420, up nearly 12%, erasing most of its year-to-date losses.

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## The Inflation Report: PCE Shows Cooling in June

The economic data also provided support. The Commerce Department reported that the Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, rose **3.7%** in June, down from 4.1% in May. Core PCE, which excludes food and energy, rose 3.3% year-over-year, down from 3.4% in May.

**The monthly core PCE reading of 0.1%** was the lowest since the pandemic, marking a significant step in the right direction.

The cooling was largely driven by a brief pause in the Iran war in June, which sent oil prices tumbling and lowered energy costs. However, with fighting having resumed and oil prices climbing again, economists warn that the relief may be short-lived.

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## The Fed's Divided House

Wednesday's Federal Reserve decision—a 9-3 vote to hold rates steady—left investors uncertain about the central bank's next move. Three regional presidents dissented, arguing that inflation remained too high and that a rate hike was warranted.

Chair Kevin Warsh defended the hold but offered no clarity on whether the Fed would hike in September. His comment that "one good print won't change the trajectory of monetary policy" was met with a "respectful but firm" pushback from the bond market, which drove 10-year Treasury yields above 4.65%.

Thursday's rally suggests investors are looking past the Fed's indecision, focusing instead on the undeniable earnings growth from Microsoft, Amazon, and the broader tech sector.

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## What's Next: Amazon and Apple After the Bell

The two remaining Magnificent Seven stocks—**Amazon** and **Apple**—report quarterly results after the closing bell on Thursday.

**Amazon** is expected to report earnings per share of $3.99 on revenue of $174.8 billion. The company's cloud unit, AWS, is projected to grow 23% year-over-year. Investors will also watch for updates on Amazon's AI investments and its advertising business.

**Apple** is expected to report earnings per share of $3.10 on revenue of $106.3 billion. The company's iPhone sales are projected to have grown 8%, while its services business—including iCloud and App Store revenues—is expected to post double-digit growth. Investors will also listen for commentary on how the AI-driven memory chip shortage has affected Apple's costs.

The combined market cap of Amazon and Apple exceeds **$8.5 trillion**. Their earnings reports could set the tone for the final day of trading this week.

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## Frequently Asked Questions

### Q: Why did Microsoft stock surge on Thursday?

A: Microsoft reported record quarterly revenue of $90 billion, Azure cloud growth of 43%, and kept its AI capital expenditure guidance unchanged at roughly $175 billion. Investors rewarded the company for demonstrating that its AI spending is driven by real customer demand and is translating into revenue growth.

### Q: How did the PCE inflation report affect the market?

A: The June PCE report showed cooling inflation, with annual headline PCE dropping to 3.7% and core PCE edging down to 3.3%. The monthly core PCE reading of 0.1% was the lowest since the pandemic, providing relief for investors and supporting the case for a Fed pause.

### Q: Why did Meta stock drop after earnings?

A: Meta reported an EPS miss, with earnings per share of $6.18 falling short of the $7.17-$7.22 consensus. The company's net income fell 14%, free cash flow collapsed 91% to just $784 million, and costs surged 55% due to legal charges, severance costs, and rising AI infrastructure spending.

### Q: What is the Fed's next move?

A: Markets are pricing roughly a 57% chance of a September rate hike, but the Fed has offered little clarity. The three dissents and Warsh's refusal to commit to a path leave investors guessing.

### Q: What should I watch for in Amazon and Apple earnings?

A: For Amazon, watch AWS growth (projected at 23%) and commentary on AI spending. For Apple, watch iPhone sales growth and any updates on how the AI-driven memory chip shortage has affected costs. Both reports are due after the closing bell on Thursday.

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## Disclaimer

**IMPORTANT:** This article is for informational and educational purposes only and does not constitute financial, investment, or trading advice. The information contained herein is based on publicly available sources and reflects the author's understanding as of the publication date. Market conditions, stock prices, and company performance are subject to rapid change. Past performance is not indicative of future results. You should consult with a qualified financial advisor before making any investment decisions.