(Bloomberg) — A rally in big tech drove stocks higher, with traders parsing the latest inflation and spending data illustrating the tug and pull that has Federal Reserve officials split over the course of monetary policy. Bond yields fell. The dollar rose for a sixth straight day.
Equities extended their July advance, with the S&P 500 set for a third straight month of gains, the longest winning run since September. The tech-heavy Nasdaq 100 rose about 1%, with Microsoft Corp. entering the $4 trillion market-capitalization club as solid results fueled AI optimism. Meta Platforms Inc. jumped 13% after strong earnings.
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“The two tech giants didn’t merely beat expectations — they smashed them,” said Fawad Razaqzada at City Index and Forex.com.
Treasury 10-year yields fell two basis points to 4.35%. The dollar headed toward its best month in 2025.
The Federal Reserve’s preferred measure of underlying inflation accelerated in June to one of the fastest paces this year while consumer spending barely rose, underscoring the dueling forces dividing policymakers over the path of interest rates.
The core personal consumption expenditures price index rose 0.3% from May. It advanced 2.8% on an annual basis, a pickup from June 2024 that underscores limited progress on taming inflation in the past year.
“Inflation remains sticky and justifies the Fed’s decision to keep interest rates unchanged at Wednesday’s meeting,” said Clark Bellin at Bellwether Wealth. “The stock market doesn’t need rate cuts in order to move higher and has already posted strong gains so far this year without any rate cuts.”
The market’s attention now turns to Friday’s jobs report for July, which caps a very busy week of economic and earnings data, he noted.
Separate data Thursday showed initial jobless claims were little changed last week. Another report showed labor cost growth rose 3.6% from a year ago, matching the lowest since 2021, reassuring Fed officials that the job market isn’t a source of inflationary pressure.
President Donald Trump resumed his criticism of Fed Chair Jerome Powell after the central bank declined to cut interest rates, ending a short-lived détente.
Trump’s comments come after Fed officials left interest rates unchanged on Wednesday but downgraded their view of the US economy, signaling that policymakers could be edging closer to lowering borrowing costs.
Meantime, Trump has unleashed a series of tariff deals and demands ahead of his Friday deadline. He announced tariffs of 15% on imports from South Korea that matched the rate for neighbor Japan, and a 25% levy on imports from India.
Treasury Secretary Scott Bessent said that he’s set to discuss with President Donald Trump Thursday an extension of the tariff-hike truce with China, expressing confidence a settlement will be reached.
Corporate Highlights:
Microsoft Corp. plans to spend over $30 billion in the current quarter to build out the data centers powering artificial-intelligence services. Its results suggested the firm, perhaps the most prodigious spender of the AI age, is starting to see a return in the form of rising sales. Meta Platforms Inc. topped projections for second-quarter sales and gave a stronger-than-expected forecast for the current period, a sign that the social media company’s advertising business is still growing quickly enough to support aggressive spending on artificial intelligence. Chinese authorities summoned Nvidia Corp. to discuss alleged security risks related to its H20 chips, casting doubt over the domestic business of the world’s most valuable company weeks after co-founder Jensen Huang met senior officials in Beijing. Qualcomm Inc., the biggest maker of chips that run smartphones, fell in late trading after reporting lackluster growth in that market, fueling concerns that tariffs will take a toll on the industry. Ford Motor Co. said its profit this year is poised for a sharp drop on the growing fallout from President Donald Trump’s tariffs, underscoring the dramatic policy shifts in Washington that are upending the auto industry. Moderna Inc. is cutting about 10% of its workforce, part of an effort by the struggling biotech company to reduce spending as sales of its Covid vaccine decline. Bristol Myers Squibb Co. lifted its full-year guidance after beating Wall Street’s estimates on revenue and profit, burnishing the company’s efforts to return to consistent growth by the end of the decade. AbbVie Inc. raised its full-year profit forecast, thanks to booming sales from a pair of newer immunology drugs that beat Wall Street’s estimates. A trial of Eli Lilly & Co.’s blockbuster diabetes drug Mounjaro fell short of expectations that it would do a better job of preventing heart attacks and strokes than its older medicine Trulicity. Biogen Inc. raised its full-year financial guidance as growing sales of its Alzheimer’s drug helped the biotech company beat Wall Street’s expectations. CVS Health Corp. raised its profit guidance for the year after posting strong results in its health insurance and pharmacy businesses, an encouraging sign after a spate of missteps by rival insurers. Cigna Group reported second-quarter profit slightly ahead of analysts’ expectations and affirmed its outlook for the year, a sign of stability in a turbulent time for the broader health insurance sector. Lyft Inc. has gained the necessary regulatory clearance to complete its acquisition of European taxi app Freenow, setting the stage for the US rideshare company to expand its operations into Europe. Bombardier Inc. had its strongest quarter for business jet orders in over a decade and says it’s on track to meet its full-year guidance. Unilever Plc’s sales rose more than expected in the second quarter, driven by personal care brands such as Dove soap and a strong performance in the ice cream division it plans to spin off. Some of the main moves in markets:
Stocks
The S&P 500 rose 0.7% as of 9:39 a.m. New York time The Nasdaq 100 rose 0.7% The Dow Jones Industrial Average was little changed The Stoxx Europe 600 fell 0.3% The MSCI World Index rose 0.3% Microsoft rose 5.9% Meta rose 13% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro was little changed at $1.1413 The British pound fell 0.3% to $1.3199 The Japanese yen fell 0.6% to 150.40 per dollar Cryptocurrencies
Bitcoin rose 1.1% to $118,390.25 Ether rose 1% to $3,807.45 Bonds
The yield on 10-year Treasuries declined two basis points to 4.35% Germany’s 10-year yield declined two basis points to 2.68% Britain’s 10-year yield declined three basis points to 4.57% The yield on 2-year Treasuries declined one basis point to 3.93% The yield on 30-year Treasuries declined three basis points to 4.87% Commodities
West Texas Intermediate crude fell 0.9% to $69.34 a barrel Spot gold rose 1% to $3,306.92 an ounce ©2025 Bloomberg L.P.