Stocks Jump, Microsoft Shares Surge, Iran War Widens, More
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What is the main topic discussed in this episode?
Gain insight on the innovators, disruptors, and tech-driven trends shaping today's complex economy. I'm Carol Masser. And I'm Tim Stenevek.
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News when you want it with Bloomberg News Now. I'm Karen Moscow. Wall Street is staging a comeback as dip buyers emerge, lifting stocks as chip makers rebound, while data signals the economy remains in good shape but is not overheating. Microsoft shares, they are soaring up more than 15%. It's after the company reported the fastest cloud growth in four years, suggesting its AI and computing services are making inroads with customers. We get more with Bloomberg's Dan Curtis.
The company is reining in spending, but on a very important note, it is also monetizing on the spending that it's putting out. So just to put some numbers into context, Microsoft's operating expenditures rose 10% year-on-year for the last quarter, and its free cash flow was still $20 billion. So the companies spent $41 billion in CapEx, and Wall Street was expecting a bit more than that. So again, Microsoft spending a bit less than Wall Street was estimating, but still beating on the revenue.
And that's Bloomberg's Dan Curtis. Meta, meanwhile, we continue to watch. It's down more than 9%. The Facebook and Instagram owner gave a disappointing quarterly revenue forecast. U.S. economic growth moderated in the second quarter, though a pickup in consumer spending and solid business investments signaled underlying strength. Inflation-adjusted gross domestic product increased an annualized 1.5 percent in the three months through June. That marked a deceleration from the start of the year, in part due to a surge in imports. The chief economic advisor at the White House, Kevin Hassett, was a guest on Bloomberg Television.
Final sales were up almost 4%. We had a big boom in consumption, a big boom in investment. We even had big positive housing numbers. And those were offset in the bottom line because the capital spending that we're doing is imported capital goods, which subtracts imports from that. And then also because of technical changes in the price of oil, they revalued the oil inventories. That subtracted from GDP as well. So I think that the final sales number of 3.9 is really what I would say is the signal.
What market movers are driving today's stock rebound and chip maker rally?
So it's not a half-full glass of GDP, it's a full glass.
And that's White House National Economic Council Director Kevin Hassett, who appeared on Bloomberg Television this morning. In the Middle East, the U.S. and Iran exchanged airstrikes today as hope dimmed for any quick resolution to the fighting. After a brief respite, the risk of a return to all-out war emerged once more. with the fighting threatening to engulf even more countries. Jordan said today it intercepted Iranian missiles for the second consecutive day, while Kuwait set a strike in the northern part of the country, killed one person. Norman Rule is a non-resident senior advisor with the Warfare Irregular Threats and Terrorism Program at the Center for Strategic and International Studies.
Well, we're watching the gradual fading of red lines of Gulf countries to be involved directly in this conflict. Now, again, the conflict is spreading into a multi-theater war. And in addition to Gulf actors, we've had the Ukrainian strike on an Iranian ship in the Caspian.
Why did Microsoft shares surge more than 15% after its latest earnings?
So what is happening is the red lines for other actors to strike back against Iran to demonstrate they're not going to be punching bags for Iranian weapons, that is gradually fading. And that trend will likely continue, although the Saudis and others will push for de-escalation and to try to keep the region calm.
And that's Norman Rule at the Center for Strategic and International Studies.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–2:37
2
What market movers are driving today's stock rebound and chip maker rally?
2:37–3:36
3
Why did Microsoft shares surge more than 15% after its latest earnings?
3:36–5:28
4
How is Microsoft balancing increased cloud spending with strong free cash flow?
5:28–7:16
Speakers
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