Stocks are bouncing back after yesterday's punishing session, with the Nasdaq composite gaining more than 2% as chip stocks rebound and Microsoft has one of its best days in nearly two decades.

The PHLX Semiconductor Index is up 8% and was recently on pace for its biggest gain in more than a year. The move, driven by big gains in Micron, Lam Research, Applied Materials, AMD and Intel, would snap a five-session losing streak for the volatile benchmark.

Microsoft stock has shot up 17%, on course for its biggest percentage gain since 2008. The rally has added about $485 billion to the company's market cap, which would be a record for any U.S. company. Microsoft's surge followed earnings that beat expectations due in part to robust cloud growth.

Later this afternoon, investors will get more insights on how tech giants are monetizing their massive AI outlays when hyperscalers Amazon and Apple report earnings.

Treasury yields meanwhile are hovering at multiyear highs, pushing up borrowing costs and reflecting worries about rising inflation and whether the Fed will act decisively enough to tame it.

Investors yesterday dumped long-dated bonds after Federal Reserve Chairman Kevin Warsh introduced doubt about his willingness to raise interest rates. That pushed the 30-year Treasury yield to levels not reached since around 2007.