Stocks ripped back nearly all of Wednesday's Fed-hold drawdown as Microsoft's cloud beat ignited a tech melt-up into the close.
The tape found its footing early after in-line PCE (headline 3.7%, core 3.3% y/y) and a soft Q2 GDP print (1.5% vs 2.1% expected) took some heat off the hawkish repricing, while jobless claims stayed benign. Microsoft's surge on a 43% cloud revenue beat dragged the entire semis and mega-cap complex higher, making tech the standout sector and pushing the Nasdaq Composite through 25,100 to end its longest losing streak since spring. Breadth improved but stayed narrower than the index move — this was a crowded, single-stock-driven rally more than a broad risk-on rotation.
Into the close price reclaimed the prior balance area comfortably, closing back above where dealers were likely net short gamma yesterday, which helped compress realized vol and pull VIX back toward 18. Call open interest overhead near round-number strikes should act as a magnet/resistance if futures gap further; a fail back below the flip reopens yesterday's air pocket fast given how thin support is underneath.
The risk: bonds didn't rally with stocks. The 30-year sits at its highest yield since 2007 and fed funds futures have swung sharply toward pricing a September hike, so tonight's Amazon and Apple prints, plus any follow-through in long-end yields, are what decide whether this was a genuine low or just a single-stock squeeze that fades on the open.