Wall Street ended sharply higher on Friday after blockbuster earnings from Amazon reignited investor confidence in artificial intelligence, helping offset concerns over elevated US Treasury yields and the prospect of higher interest rates.
The rally was led by technology stocks, with Amazon soaring 15.3% after reporting quarterly profit of more than $62 billion on a 20% jump in revenue, comfortably beating analysts` expectations.
The results followed another strong earnings report from Microsoft, easing recent doubts over whether massive AI investments would deliver meaningful returns.
The tech-driven optimism lifted all three major US indexes, with the Nasdaq climbing 1.0%, while the S&P 500 advanced 0.7% and the Dow Jones Industrial Average gained 0.5%.
The gains came despite a 7.4% drop in Apple shares after investors reacted negatively to the company`s outlook.
Markets, however, remained cautious as US Treasury yields stayed elevated, reflecting concerns that stubborn inflation could force the Federal Reserve to resume raising interest rates.
Investor attention remained fixed on the Fed after policymakers left rates unchanged earlier this week.
On Friday, the three officials who dissented from that decision reiterated that immediate rate hikes were necessary to prevent inflation from becoming entrenched.
"Inflation has been too high for too long," Cleveland Federal Reserve President Beth Hammack said, warning that delaying action could make bringing inflation under control more difficult and costly.
Earlier in the day, Asian markets posted broad gains, led by an extraordinary rebound in South Korea, where the Kospi jumped nearly 18% as technology shares recovered from weeks of heavy selling.
Chipmakers SK hynix and Samsung, which had lost around half their market value during the recent AI-driven correction, led the recovery.
SK hynix surged 30%, erasing losses recorded over the previous two trading sessions.
The rebound gathered further momentum after South Korea announced plans to invest nearly $14 billion through its sovereign wealth fund to support artificial intelligence projects and data centres.
Analysts said recent weakness in technology stocks was driven more by investor concerns over the timing of returns from AI investments than by any deterioration in business fundamentals.
"The rebound in tech powered by Microsoft`s extremely well-received numbers has helped lift the broader market mood, helping investors to put concerns about the Iran conflict and its continuing impact on ice for now," said Russ Mould, investment director at AJ Bell.
In the currency market, the Japanese yen held on to gains against the US dollar after surging a day earlier on speculation that Japanese authorities had intervened to support the currency, which had been trading near four-decade lows.
In Europe, London`s FTSE 100 briefly touched another record high and came close to the 11,000-point mark before retreating to end the session slightly lower.
France`s CAC 40 and Germany`s DAX both closed higher.
Market close:
Dow Jones: up 0.5% at 52,485.03
S&P 500: up 0.7% at 7,489.72
Nasdaq Composite: up 1.0% at 25,373.85
FTSE 100: down 0.3% at 10,868.05
CAC 40: up 0.3% at 8,509.64
DAX: up less than 0.1% at 25,629.24
Kospi: up 17.9% at 6,595.45
Nikkei 225: up 4.0% at 64,362.02
Hang Seng: up 0.1% at 25,884.43
Shanghai Composite: up 0.7% at 3,832.26
In commodity markets, Brent crude rose 1.2% to $90.12 a barrel, while US West Texas Intermediate gained 1.3% to settle at $84.67 per barrel.
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