The Dow Leads Market Indexes Higher as Microsoft Adds 120 Points

Stocks rose Friday, with the Dow Jones Industrial Average (DJINDICES: ^DJI) leading. Microsoft (NASDAQ: MSFT) decided it doesn't want to build your personal AI assistant after all, and investors loved it. Meta (NASDAQ: META) absolutely wants to build your personal AI assistant, and the Muse maker had a worse morning.

The Dow rose 0.8% as of 12:49 p.m. ET. The Nasdaq Composite (NASDAQINDEX: ^IXIC) gained 0.5%, and the S&P 500 (SNPINDEX: ^GSPC) added 0.4%. Nineteen of the Dow's 30 components traded higher.

^DJI data by YCharts

Microsoft gave up on consumer AI to investor applause

Microsoft was the leading driver of the major indexes' bullish moves this morning. The software giant jumped 4.1% and added 120 Dow points after merging its consumer and workplace Copilot apps into one enterprise product. Translation: Microsoft is ceding the personal chatbot market to OpenAI, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), and Meta so it can focus on a more lucrative customer class.

Image source: Getty Images.

Meta took the other side of that bet and dropped 3.6%, losing most of Thursday's 4.3% gain. The Facebook and Instagram parent laid out plans to put its Muse agent into AI glasses, previewed a pocket-sized gadget called Charm, and promised more than 100 styles of Muse-driven glasses by year-end. Investors were unimpressed.

In the hardware sector, memory-chip giant SK Hynix (NASDAQ: SKHY) rose 3% after the Taiwanese media outlet DigiTimes reported that the company is in the running for significant memory orders as Sony (NYSE: SONY) assembles the next PlayStation console. Sector rival Micron Technology (NASDAQ: MU) held steady with a 0.2% price drop as investors brace for next week's earnings report.

And this mid-day market review can never ignore the oil trade. The United States Oil Fund (NYSEMKT: USO) dropped 3.2% after Iran's foreign minister, Abbas Araghchi, said the Strait of Hormuz could reopen within seven days and that nuclear talks could restart, provided Washington meets his conditions. Brent crude prices slipped 1% lower to $105 per barrel.

Don't celebrate at the pump just yet

Here's the catch in Araghchi's offer. His conditions are the same as those in the June 17 memorandum of understanding, and the Trump administration has already said it won't return to those terms. That deal also fell apart within weeks of being signed. Araghchi said Iran isn't in a hurry, while acknowledging that a deal before the midterms would probably be better for everyone involved.

Don't expect the pump to catch up quickly either. Regular gas averages $4.49 per gallon today, up roughly 10% in a month and 42% in a year, and diesel is $6.50 per gallon after hitting a record $6.53 on Tuesday. Fuel prices follow crude with a lag, so one day of falling oil doesn't necessarily fix anything at your local gas station right away.

Two Dow gainers had no explanation to speak of. Caterpillar (NYSE: CAT) added 73 points on a 1.5% rise and Sherwin-Williams (NYSE: SHW) contributed 49 more on a 2.6% gain, neither with company news attached. Both are cyclical names that tend to move with the economy rather than their own announcements. And their beefy share prices result in heavy Dow weightings, currently totaling about 13% of the total index score.

Seven days is a short deadline for a war in its seventh month. The market seems to be in an optimistic mode about these discussions, though. Next week brings Micron's earnings, followed by the discussion deadline.

Anders Bylund has positions in Alphabet and Micron Technology. The Motley Fool has positions in and recommends Alphabet, Caterpillar, Meta Platforms, Micron Technology, and Microsoft. The Motley Fool recommends Sherwin-Williams. The Motley Fool has a disclosure policy.