US stocks experienced a rebound, with the S&P 500 futures bouncing 0.5% after the index had slipped into a technical correction. This upward movement was largely fueled by strong growth reported by Microsoft Corp., which helped to alleviate investor concerns surrounding AI monetization strategies. Microsoft's stock jumped 9% in after-hours trading following its earnings report, contrasting with Meta Platforms, which saw an 8% fall after its quarterly results heightened scrutiny of its AI monetization efforts.
The broader market, however, also reacted to the Federal Reserve's decision to maintain interest rates, which led to a significant sell-off in long-dated bonds. The 10-year Treasury yield increased by 7 basis points to over 4.67%, and the 30-year Treasury yield soared by 10 basis points to above 5.2%, reaching its highest level since 2007. This bond market rout underscores lingering concerns despite the positive tech earnings.
Prior to the bounce, Wednesday saw major indices decline, with the Dow Jones Industrial Average dropping 2.19% (1,153.18 points), marking its worst decline since April 2025. The S&P 500 fell 1.52%, and the Nasdaq Composite decreased by 1.74%, placing it more than 10% off its intraday record. Chipmakers were particularly affected, contributing to the Nasdaq 100 entering a technical correction with an 11% slide from its June record high. The Fed's "wait-and-see mode" on interest rates, as commented by Sameer Samana of Wells Fargo Investment Institute, means the September meeting remains "live" for potential action if inflation pressures persist.
