US Stocks Open Higher: Microsoft Earnings Soothe Nerves, Major Indices Rise, TSMC ADR Gains Over 5%

US major stock indices opened higher on Thursday (30th), shaking off the selling pressure from the previous day's Federal Reserve (Fed) decision to hold interest rates steady. Microsoft's financial results and outlook exceeded expectations, alleviating market concerns that tech giants' massive investments in artificial intelligence (AI) might not yield profits, driving a rebound in chip and tech stocks.

Investors also digested the latest economic data. US Q2 GDP growth came in at 1.5% annualized, below expectations, but domestic demand remained strong. June's PCE price index unexpectedly declined 0.1% month-on-month, indicating that while the economy remains resilient, overall inflation is cooling.

At press time, the Dow Jones Industrial Average was up nearly 200 points or 0.4%, the Nasdaq Composite Index up nearly 390 points or 1.6%, the S&P 500 Index up 0.8%, and the Philadelphia Semiconductor Index up nearly 5.5%. TSMC ADR rose over 5.0%.

US stocks rebounded on Thursday as investors bought back heavily sold-off tech stocks, lifting semiconductor manufacturers. The latest economic data showed that the US economy remains fundamentally sound without signs of overheating, further supporting market sentiment.

After a sharp pullback in one of Wall Street's most crowded trades, semiconductor giants broadly rebounded in early trading, with Nasdaq 100 futures up 1.5%. Microsoft shares surged 9%, driven by its cloud business posting the fastest growth in four years. This strong performance offset the decline in Meta, which fell due to disappointing revenue guidance for the current quarter.

US stocks maintained gains after the economic data release. US Q2 real GDP, adjusted for inflation, grew at a 1.5% annualized rate, below market expectations. However, consumer spending accelerated and business investment remained solid, indicating resilient domestic demand. US Treasury prices changed little, with the 30-year yield near its highest level since 2007. The dollar weakened, while oil prices were volatile.

Market focus will now shift to Apple and Amazon's earnings reports after the close, seeking more clues on the trajectory of the 'Magnificent Seven'. As investors grow increasingly concerned about whether tech giants' massive AI investments can translate into actual returns, the Magnificent Seven have underperformed the broader market year-to-date.

Hoffmann-Burchardi, strategist at UBS Chief Investment Office, said he remains optimistic about the long-term AI growth trend but advised investors to manage concentration risk and broaden their investments into more defensive tech stocks.

As of around 9:00 PM Taipei time on Thursday (30th):

Dow Jones Industrial Average up 266.39 points or 0.52%, temporarily at 51,860.53

Nasdaq Composite Index up 401.05 points or 1.64%, temporarily at 24,843.99

S&P 500 Index up 62.46 points or 0.85%, temporarily at 7,378.61

Philadelphia Semiconductor Index up 557.62 points or 5.34%, temporarily at 11,005.11

TSMC ADR up 4.65% to $392.15 per share

10-year Treasury yield rose to 4.67%

NY Light Crude down 1.31% to $83.35 per barrel

Brent Crude down 1.50% to $89.38 per barrel

Gold up 1.05% to $4,140.10 per ounce

Dollar Index down to 100.65

Key stocks:

Microsoft (MSFT-US) up 15.05% in early trading to $449.32 per share

Microsoft surged 9% pre-market after reporting quarterly revenue of $90.01 billion, above the $87.62 billion consensus estimate compiled by LSEG. Azure grew 43% in constant currency, exceeding StreetAccount's forecast of 40.2%. Microsoft also stated that Azure revenue will surpass $100 billion for the first time in the 2026 fiscal year.

Meta (META-US) down 8.44% in early trading to $536.21 per share

Meta Platforms plunged nearly 9% pre-market. The company's latest quarterly EPS was $6.18, $1.04 below the LSEG analyst consensus. Meta forecast Q3 revenue between $61 billion and $64 billion, with the lower end below the analyst estimate of $63.15 billion. The weak guidance triggered market concerns about its growth prospects.

Starbucks (SBUX-US) up 2.89% in early trading to $107.15 per share

Starbucks jumped 6% pre-market as it raised its full-year forecast. Same-store sales grew 7.9% in the latest quarter. Adjusted EPS was $0.85, above the $0.66 analyst estimate; revenue reached $9.32 billion, also exceeding the $9.16 billion market expectation.

Today's key economic data:

US Q2 GDP annualized rate (preliminary): 1.5%, expected 2.1%, previous 2.1%

US Q2 Core PCE annualized rate (preliminary): 3.4%, expected 3.5%, previous 4.4%

US Q2 Real Personal Spending annualized rate: 0.4%, previous 0.4%

US June PCE Price Index YoY: 3.7%, expected 3.7%, previous 4.1%

US June PCE Price Index MoM: 0.3%, expected 0.4%, previous 0.9%

US June Core PCE Price Index YoY: 3.3%, expected 3.3%, previous 3.4%

US June Core PCE Price Index MoM: 0.1%, expected 0.2%, previous 0.3%

US Weekly Initial Jobless Claims: 197,000, expected 201,000, previous 188,000

US Weekly Continuing Jobless Claims: 1,782,000, expected 1,800,000, previous 1,789,000

Wall Street analysis:

JPMorgan currently expects the Fed to raise rates in December, earlier than its previous forecast of the second half of 2027. The chief US economist wrote in a report: 'At Powell's press conference, he again failed to clearly explain how he intends to deliver on his strongly stated commitment to fighting inflation.'

The chair also questioned whether PCE would remain the Fed's inflation target, 'both points raising doubts about whether this new chair can achieve the disinflation goal.' This, in turn, may create greater urgency for other FOMC members to fulfill their duties.