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Indexes up: Dow 0.20%, S&P 500 0.71%, Nasdaq 1.16%

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Microsoft ( MSFT ), Meta surge after blowout quarterly results

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

demand

(Updates with market open prices)

By Nikhil Sharma and Pranav Kashyap

July 31 (Reuters) - The S&P 500 and Nasdaq climbed to

new record highs on Thursday, as Microsoft's ( MSFT ) blockbuster

earnings propelled the tech giant past the $4 trillion milestone

and fueled investor confidence in Big Tech's hefty investments

in artificial intelligence.

Microsoft ( MSFT ) became the second publicly traded

company after Nvidia ( NVDA ) to surpass $4 trillion in market

valuation, following a blockbuster earnings report.

Meta Platforms ( META ) also climbed 12.1% to an

all-time high in early trading, after the social media giant

forecast third-quarter revenue well above estimates, thanks to

AI boosting its core advertising business.

Nvidia ( NVDA ) gained more than 1%.

The S&P technology index and the communication

services index both hit record highs, up 1.2% and over

3%, respectively.

At 09:50 a.m. ET, the Dow Jones Industrial Average

rose 88.73 points, or 0.20%, to 44,550.01, the S&P 500

gained 45.18 points, or 0.71%, to 6,408.08 and the Nasdaq

Composite gained 245.09 points, or 1.16%, to 21,374.76.

A Commerce Department report showed U.S. inflation increased

in June as tariffs on imports started raising the cost of some

goods, supporting economists' expectations that price pressures

would pick up in the second half of the year.

"Thursday's PCE was stronger than expected and throws cold

water on the idea of a fall rate-cut, as it's clear that lower

interest rates are not justified at this time," said Clark

Bellin, president and chief investment officer, Bellwether

Wealth.

"Inflation remains sticky and justifies the Fed's decision

to keep interest rates unchanged at Wednesday's meeting."

Separately, weekly jobless claims increased marginally

last week, suggesting the labor market remained stable.

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.

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.

On Wednesday, Federal Reserve Chair Jerome Powell

diluted investor expectations for an interest rate cut in

September after the central bank kept rates unchanged.

Traders now see a 58.8% chance the Fed will stay pat in

September as well, according to CME's FedWatch tool.

Powell said it was too early to predict a September rate

cut, and that current policy was not restricting the economy.

The statement came after stronger-than-expected GDP data for the

second quarter.

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%.

Among other stocks, Applied Digital ( APLD ) soared 32.7%

after the data center operator surpassed estimates for quarterly

revenue.

Declining issues outnumbered advancers by a 1.17-to-1 ratio

on the NYSE, and by a 1.16-to-1 ratio on the Nasdaq.

(Reporting by Nikhil Sharma and Pranav Kashyap in Bengaluru;

Editing by Devika Syamnath)