After a period of declines, the Nasdaq 100 surged by 3% following a technical correction, indicating a revival in AI-related trades. This rebound was largely fueled by a rally in semiconductor giants, which had previously experienced a rout. Microsoft Corp. saw a significant 15% jump as its cloud unit recorded its fastest growth in four years, signaling that its substantial investments in AI infrastructure are beginning to pay off. The S&P 500 also rose by 1.3%, and the Dow Jones Industrial Average gained 0.7%.
These gains occurred amidst data showing a pickup in consumer spending and robust business investment, even as the economy expanded. Equities held steady, and analysts anticipate that S&P 500 aggregate second-quarter earnings will increase by 40% year-over-year, with AI-related stocks contributing significantly to this growth. However, the market's positive movement was somewhat tempered by Meta Platforms Inc.'s slide after it provided a disappointing quarterly revenue forecast and increased its 2026 capital expenditure outlook to between $130 billion and $145 billion.
Earlier, the Nasdaq 100 had experienced an 11% drop from its June record high, entering a technical correction, as investors expressed concerns over heavy capital spending on AI infrastructure by major U.S. companies. Chipmaker stocks, including the Philadelphia Semiconductor Index (SOX), suffered significant losses, with SOX dropping 5% and heading for its worst month since 2002. This downturn was exacerbated by SK Hynix's quarterly profit falling short of investor expectations, causing its shares to drop 10%, and Vertiv slumping 17% after missing revenue forecasts. Despite these prior concerns, the market saw renewed buying interest, particularly in the semiconductor sector, on July 29th, 2026.
