San Francisco Frontiers - Blowout Microsoft results lift US stocks as oil retreats

Shares of Microsoft surged more than 15 percent following strong results driven by its cloud and artificial intelligence divisions. That helped lift all three major US indices, led by the Nasdaq, which piled on 2.8 percent.

"A good deal of enthusiasm for Microsoft and tech is helping the tape," said Art Hogan of B. Riley Wealth Management.

Analysts pointed to a pullback in oil prices as supportive of equities as traders greeted comments from Pakistan insisting that negotiations between Iran and the United States were ongoing despite escalating strikes on both sides.

The Microsoft results came at the end of a difficult July for tech companies after Nasdaq's huge second-quarter gains.

Major tech companies in the US have been spending billions to build out AI infrastructure and develop increasingly more advanced AI models.

This week's earnings results have been seen as an important barometer on whether soaring tech valuations are justified.

Facebook parent Meta fell eight percent Thursday on worries over the company's lofty artificial intelligence outlays. But the Microsoft earnings provided some reassurance on that question, analysts said.

"Traders are still differentiating between companies," said FHN Financial's Chris Low. "It's a healthy sign because it means it's not just a pure momentum trade."

Major US indices had lost more than 1.5 percent on Wednesday as markets panned a press conference by new Federal Reserve Chair Kevin Warsh, pointing to a mismatch between rhetoric pledging price stability and the central bank's decision not to hike rates.

US Treasury yields remained high on Thursday, but futures markets showed rising confidence that the Fed will hike rates later this year.

Hogan, noting that there were three dissents to Wednesday's Fed decision, called the outcome a "hawkish pause," adding that the Fed is "building momentum for raising rates."

Elsewhere, the Bank of England kept its benchmark rate unchanged Thursday as expected, although the central bank warned that UK inflation was set to rise again as the US-Iran war keeps energy prices elevated.

The London stock market, not far off reaching a record 11,000 points thanks to an absence of technology firms, slipped into the red shortly before the closing bell.

In Asia, South Korean stocks extended a painful retreat Thursday as a promising start gave way to more bloodletting in the tech field, while the rest of Asia was mixed.

South Korean technology giant Samsung Electronics posted a 19-fold jump in second-quarter operating profit from a year earlier, buoyed by frenzied demand for memory chips used in AI data centers.

However, its share price ended lower.

Adidas slumped nearly 11 percent in Frankfurt after the German sportswear maker missed profit expectations, weighed down by the costs of World Cup marketing.

- Key figures around 2020 GMT -

New York - DOW: UP 1.2 percent at 52,208.06 (close)

New York - S&P 500: UP 1.7 percent at 7,437.63 (close)

New York - Nasdaq Composite: UP 2.8 percent at 25,122.18 (close)

London - FTSE 100: DOWN 0.1 percent at 10,897.27 (close)

Paris - CAC 40: UP 0.9 percent at 8,485.64 (close)

Frankfurt - DAX: UP 0.6 percent at 25,612.03 (close)

Seoul - Kospi: DOWN 1.2 percent at 5,593.56 (close)

Tokyo - Nikkei 225: UP 0.7 percent at 61,867.43 (close)

Hong Kong - Hang Seng Index: UP 0.2 percent at 25,858.88 (close)

Shanghai - Composite: DOWN 0.6 percent at 3,804.69 (close)

Brent North Sea Crude: DOWN 1.9 percent at $89.03 per barrel

West Texas Intermediate: DOWN 1.0 percent at $83.59 per barrel

Euro/dollar: UP at $1.1529 from $1.1467 on Wednesday

Pound/dollar: UP at $1.3468 from $1.3367

Dollar/yen: DOWN at 162.61 yen from 163.41 yen

Euro/pound: DOWN at 85.60 pence at 85.77 pence

burs-jmb/msp

F.Garcia--SFF