Major U.S. stock indexes experienced a recovery on Thursday afternoon, following a tumultuous day of earnings reports and economic data. The Nasdaq Composite, which had its worst day since 2022 on Wednesday, saw a 0.4% increase after initially falling over 1%. Similarly, the S&P 500 rose by 0.5%, while the Dow Jones Industrial Average gained 0.8%.

Wednesday's stock market plunge was primarily driven by disappointing earnings reports from tech giants Tesla and Alphabet, which led to steep declines in mega-cap technology stocks. All of the "Magnificent Seven" technology stocks suffered sharp declines, with Alphabet, Microsoft, and Meta Platforms continuing to lose ground in Thursday's afternoon trading.

However, amidst the market turbulence, a few notable tech companies managed to bounce back. Nvidia, a previously star-performer, experienced a rebound from an early-morning dive. Despite a decline of more than 15% in recent weeks, Nvidia remains the second-best performing stock in the S&P 500 this year, with a return of approximately 130%.

The recent downturn in large-cap technology companies coincided with a surge in small-cap stocks, as investors place bets on smaller companies that may benefit from anticipated interest rate cuts by the Federal Reserve. The Russell 2000 small-cap index was up more than 2% on Thursday afternoon, indicating this shift in investor sentiment.

Investors closely followed economic data for indications of when the Federal Reserve might begin cutting interest rates. Although data released on Thursday showed that U.S. economic growth exceeded expectations in the second quarter, investor expectations for an interest rate cut by September remained unchanged. The Fed has emphasized the need for further evidence of receding inflationary pressures to support a rate cut decision.

Meanwhile, shares of certain companies took a hit due to disappointing earnings reports. Honeywell International saw its shares fall over 4% following a lowered full-year profit guidance. However, the company raised its revenue guidance, reporting strong second-quarter results that exceeded estimates.

In the pharmaceutical industry, shares of Eli Lilly and Novo Nordisk declined after Viking Therapeutics announced advances in trials of its weight-loss drugs. Investors expressed concerns that the new drugs could challenge the dominance of Novo Nordisk's Wegovy and Eli Lilly's Mounjaro.

On a positive note, consumer-goods giant Unilever saw a surge in its shares, attributed to an earnings beat. The company also provided a positive outlook, including plans for a spinoff of its ice cream division, which is expected to be completed by the end of 2025.

Overall, investors navigated the volatile market, seeking opportunities in the rapidly changing landscape. The performance of tech stocks, especially Nvidia, showcased investors' willingness to "buy the dip" and capitalize on potential rebounds.