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Indexes: Dow flat, S&P 500 0.45%, Nasdaq 0.8%

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Microsoft ( MSFT ), Meta rise after blowout quarterly results

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Applied Digital ( APLD ) soars as Q4 revenue beats on AI-driven

demand

(Updates with analyst comment, early afternoon prices)

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 ( MSFT ) $4 trillion milestone and braced

for Apple and Amazon's earnings later in the day.

Microsoft ( MSFT ) 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 ).

Meta Platforms ( META ) rose 12.1% to a record high as

AI-driven growth in its core ad business powered a bullish

revenue forecast, while Nvidia ( NVDA ) 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 and

communication services indexes to new record peaks.

The Nasdaq Composite 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 advanced 0.45%.

The Dow Jones Industrial Average, meanwhile, slipped

into negative territory and then became flat as UnitedHealth ( UNH )

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 and blue-chip Dow 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 ) 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.

(Reporting by Nikhil Sharma and Pranav Kashyap in Bengaluru;

Editing by Devika Syamnath)