US STOCKS-Wall St cools after Microsoft's $4 trillion moment; tech results awaited

By Nikhil Sharma and Pranav Kashyap

July 31 (Reuters) - The S&P 500 and Nasdaq receded from record highs notched earlier on Thursday, as Wall Street shifted its focus beyond Microsoft's $4 trillion milestone and braced for Apple and Amazon's earnings later in the day.

Microsoft MSFT.O jumped 5% after a blowout earnings report and briefly crossed $4 trillion in market cap, becoming only the second publicly traded company to ever touch the milestone after Nvidia NVDA.O.

Meta Platforms META.O rose 12.1% to a record high as AI-driven growth in its core ad business powered a bullish revenue forecast, while Nvidia NVDA.O also climbed more than 1%.

"The earnings that we got from them fell very much in line with what we were expecting," said Mark Malek, chief investment officer of Siebert Financial.

"We're bullish on the entire AI infrastructure" and it's very critical that these companies come out with "superior" earnings announcements, he added.

The tech rally sent the S&P technology .SPLRCT and communication services .SPLRCL indexes to new record peaks.

The Nasdaq Composite .IXIC jumped as much as 1.2% in its strongest intraday rally in nearly a month, before paring gains to 0.8%, while the S&P 500 .SPX advanced 0.45%.

The Dow Jones Industrial Average .DJI, meanwhile, slipped into negative territory and then became flat as UnitedHealth UNH.N tumbled to a two-month low.

Investors weighed a Commerce Department report showing inflation picked up in June, with new tariffs pushing prices higher and stoking expectations that price pressures could intensify in the coming months.

"Inflation remains sticky and justifies the Fed's decision to keep interest rates unchanged," said Clark Bellin, president and chief investment officer, Bellwether Wealth.

Attention now turns to Friday's non-farm payrolls report and a looming tariff deadline, with President Donald Trump refusing to extend trade talks for lagging partners.

Separately, weekly jobless claims increased marginally last week, suggesting the labor market remained stable.

Easing global trade war fears, signs of U.S. economic resilience, and renewed AI optimism have set Wall Street on course for monthly gains.

The S&P 500 .SPX and blue-chip Dow .DJI are set for a third straight monthly gain - their longest winning streak in nearly a year - while the Nasdaq was on track for its best monthly run since March 2024.

Meanwhile, Federal Reserve Chair Jerome Powell cooled hopes for a September rate cut after the central bank held rates steady. Traders now expect a 58.8% chance the Fed will stay pat in September as well, according to CME's FedWatch tool.

The "hold" verdict prompted another jibe on Powell by Trump, while Treasury Secretary Scott Bessent said he expected an announcement on Powell's successor by year-end.

EU officials said European liquor could face 15% tariffs from August 1 until a different agreement is reached, with talks set to continue in the fall.

Trump's deal with South Korea on Wednesday cut the country's import tariff to 15% from the previously threatened 25%.

Meanwhile, U.S. appeals court judges sharply questioned whether Trump's tariffs were justified by the president's emergency powers.

Among other stocks, Applied Digital APLD.O soared 32% after the data center operator surpassed estimates for quarterly revenue.

Declining issues outnumbered advancers by a 1.08-to-1 ratio on the NYSE, and by a 1.2-to-1 ratio on the Nasdaq.

The S&P 500 posted 27 new 52-week highs and 25 new lows while the Nasdaq Composite recorded 61 new highs and 103 new lows.