Microsoft earnings rally lifts Wall Street despite inflation worries

Microsoft’s more than 15% jump powered Wall Street higher Thursday, briefly overwhelming fresh anxiety over inflation, interest rates and a Treasury market under strain. The Nasdaq rose 2.8%, the S&P 500 gained 1.7% and the Dow Jones Industrial Average added 1.2%, with the blue-chip gauge up about 600 points.

At one point, Microsoft was on track for a near $450 billion single-day gain in market value, a record that would stand as the biggest one-day increase ever for a Wall Street company. The stock’s surge was its largest since 2008, and it followed fiscal third-quarter results showing revenue of $82.9 billion, up 18%, and operating income of $38.4 billion, up 20%. Quarterly capital expenditures also reached $41 billion, a scale that had raised questions about whether the company’s AI spending could translate into earnings.

The rally underscored how concentrated market leadership has become. Microsoft has turned into one of Wall Street’s clearest proxies for artificial intelligence spending, so its beat mattered well beyond Redmond. Traders rewarded the company for showing that heavy cloud and AI investment can still produce hard revenue, while many investors continued to treat a small group of megacap technology names as the main engines for the broader indexes.

The bond market told a less comfortable story. The 30-year Treasury yield hit a 19-year peak during the session, keeping pressure on stocks even as equities recovered from the previous day’s selloff. U.S. stock index futures had steadied earlier after that drop, which had been driven by uncertainty over the Federal Reserve’s policy outlook. Inflation and rate worries never fully disappeared, and the move in long-dated Treasuries showed that the market’s confidence remained fragile.

The rebound spilled into other AI-linked names, including chip stocks such as Micron, as money rotated back into growth shares. For now, Microsoft’s results have given investors a reason to keep paying up for companies that can show actual AI monetization, but the day also exposed how much of Wall Street’s advance still rests on a handful of giant technology names.