Microsoft Shatters Records, Chip Rally Ignites, Dollar Slides, Inflation Cools

Market Overview

U.S. equities staged a powerful rebound on Thursday, driven by three major catalysts.

First, Microsoft surged more than 15% intraday, delivering the largest single-day market capitalization gain in Wall Street history and its biggest daily advance in 18 years. The rally lifted the S&P 500 1.66% to 7,437.63, the Nasdaq Composite 2.78% to 25,122.18, and the Dow Jones Industrial Average 1.19% to 52,208.06.

Second, the semiconductor sector rallied across the board. The Philadelphia Semiconductor Index (SOX) jumped 8%, with Micron Technology soaring 18%, SanDisk skyrocketing 26%, AMD climbing 13%, and Taiwan Semiconductor Manufacturing Co. (TSMC) advancing more than 7%. The move was fueled by growing expectations of another wave of memory chip price increases.

Third, earnings results continued to diverge among mega-cap technology companies. Amazon surged nearly 10% in after-hours trading after reporting AWS revenue of $42.2 billion, up 37% year over year, while Apple fell more than 6% after the closing bell.

Meanwhile, the U.S. Dollar Index (DXY) dropped more than 0.9%, marking its largest one-day decline since January. The Japanese yen strengthened by more than 3% intraday after Japanese authorities signaled possible currency intervention. On the macro front, U.S. June PCE prices fell 0.1% month over month, the first monthly decline in six years, while second-quarter GDP expanded at an annualized rate of just 1.5%, reinforcing expectations that inflationary pressures continue to ease.

U.S. Stocks Rally as Microsoft Delivers a Historic Market Cap Gain

Microsoft's more than 15% intraday surge marked the largest single-day increase in market capitalization ever recorded on Wall Street, as well as its strongest daily performance in 18 years, making it the primary driver behind Thursday's market rally.

The S&P 500 rose 1.66% to 7,437.63, the Nasdaq Composite climbed 2.78% to 25,122.18, and the Dow Jones gained 1.19% to 52,208.06, completely reversing the previous session's risk-off sentiment.

The rebound was largely fueled by stronger-than-expected earnings from major technology companies, prompting investors to assign higher valuations to AI infrastructure, cloud computing, and advanced computing demand. As confidence in the AI investment cycle strengthened, market risk appetite rebounded sharply.

Market Outlook● Bank of Japan Decision Takes Center Stage Amid Yen Intervention Speculation

Following the yen's sharp 3% intraday appreciation and official signals hinting at possible currency intervention, investors will closely watch today's Bank of Japan policy decision and Governor Kazuo Ueda's press conference.

Markets are looking for clues on whether recent intervention was merely a short-term effort to stabilize the currency or the beginning of a broader policy shift. A clearer hawkish signal from the BOJ could help sustain the yen's rebound, while a more cautious stance may quickly revive carry trades and renew downward pressure on the currency.

● How Long Can the Memory Chip Supercycle Last？

The explosive gains in Micron and SanDisk, combined with SSD price increases exceeding 130%, suggest the current memory pricing cycle is more than a temporary supply disruption.

The key question now is demand sustainability. If AI-related capital expenditures remain elevated, tight memory and storage supply conditions could persist well into next year. However, any slowdown in cloud infrastructure spending could rapidly reverse pricing momentum. At this stage, the timing of the cycle may matter even more than its overall direction.

Key Events to Watch

• China: July Official Manufacturing PMI, Non-Manufacturing PMI, and Composite PMI

• Japan: Bank of Japan Interest Rate Decision and Governor Kazuo Ueda's Press Conference

• United States: July University of Michigan Consumer Sentiment and Inflation Expectations

• Eurozone: July CPI Inflation

• Japan: July Tokyo CPI

• Corporate Earnings: Exxon Mobil and Chevron