Nasdaq surges 2% as chip stocks and Microsoft rally after Fed day sell-off

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The numbers

CNBC reports the Nasdaq jumped 2% in a sharp reversal from the previous session's post-Fed decline, with semiconductor stocks and Microsoft leading the advance. The broader stock market recovered as investors absorbed the Federal Reserve's decision to keep interest rates unchanged and parsed earnings from major technology companies. The rebound followed a sell-off Wednesday after the central bank's policy announcement.

Why it matters

Microsoft's results appear to have reassured the market that spending on artificial intelligence infrastructure remains robust, pulling semiconductor stocks higher in tandem. The speed of the reversal suggests Wednesday's decline was positioning rather than a fundamental reassessment of the rate outlook.

How this compares

Stock futures rose on July 30 as Microsoft rallied after earnings, one day after the Fed held rates steady, with equity markets positioned to recover from the post-Fed sell-off. The Nasdaq had extended a chip sell-off ahead of the Fed decision on July 28, with technology stock futures falling as investors awaited a packed week of major earnings reports and the central bank's policy announcement. The pattern of sharp moves around Fed decisions followed by quick reversals has marked trading in recent months as markets weigh the path of monetary policy against corporate profit growth.

What to watch

Investors will continue parsing earnings from major technology companies to gauge whether artificial intelligence spending is translating into revenue growth. The Fed's next policy decision and any signals about the timing of future rate moves will remain in focus as markets assess the economic backdrop for equities.

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