Wall Street Gains as Tech Giants Report Strong Earnings
NEW YORK — The stock market experienced a notable uptick on Thursday, largely propelled by robust earnings reports from major technology companies. Microsoft and Meta Platforms surpassed analysts’ expectations, leading to significant positive movement in key stock indices.
Market Performance Overview
The S&P 500 index climbed 0.6%, marking its longest consecutive winning streak since August. Meanwhile, the Dow Jones Industrial Average experienced a modest increase of 83 points (0.2%), and the Nasdaq Composite soared by 1.5%.
Highlights from Major Companies
Microsoft saw a substantial 7.6% increase in its stock price after reporting a 13% growth in overall revenue year-over-year, with strong contributions from its cloud computing and artificial intelligence sectors.
Meta, which operates Facebook and Instagram, also exceeded revenue and profit forecasts. Emphasizing the role of AI tools in enhancing its advertising revenue, the company’s shares climbed by 4.2%.
Broader Economic Context
These tech giants are critical components of the S&P 500 and other indices due to their large market capitalizations. They were joined by other companies like CVS Health and Carrier Global, which also reported better-than-expected profits, providing a stabilizing effect on Wall Street.
Concerns Amid Optimism
Despite the optimistic earnings reports, uncertainty looms regarding the potential impacts of President Trump’s tariffs on the economy. Many CEOs remain cautious about future growth prospects, with General Motors announcing a reduction in its profit forecast for 2025. The company anticipates a financial hit of $4 billion to $5 billion due to tariffs.
Additionally, McDonald’s reported a 1.9% decline in its stock after revealing weaker-than-expected revenues despite a slight profit surpassing forecasts. The company acknowledged significant challenges, with one key performance metric showing its worst decline since the onset of the COVID-19 pandemic.
Consumer Sentiment and Economic Reports
Consumer surveys indicate increasing pessimism about the economic outlook. Recent mixed economic reports reflect this ambiguity. Notably, the number of U.S. workers filing for unemployment benefits exceeded expectations, setting the stage for an upcoming comprehensive job market report.
Conversely, a separate report indicated a stronger-than-expected performance in U.S. manufacturing, despite ongoing contraction.
Concerns About Stagflation
Wall Street remains wary of a potential scenario known as “stagflation,” characterized by economic stagnation combined with persistently high inflation. The Federal Reserve’s ability to address both issues is limited, as changes in interest rates to alleviate one could exacerbate the other.
Encouragingly, reports on inflation indicated a slowdown in March, providing some reassurance in the face of economic uncertainties.
Market Reactions and Global Context
In the bond market, Treasury yields fluctuated following Thursday’s economic reports, with the yield on the 10-year Treasury initially dropping below 4.13% before recovering to 4.21% after favorable manufacturing data.
The S&P 500 rose by 35.08 points, closing at 5,604.14, while the Dow added 83.60 points to finish at 40,752.96, and the Nasdaq composite gained 264.40 points, closing at 17,710.74. International trading saw countries such as Japan’s Nikkei 225 increase by 1.1% as the Bank of Japan maintained its interest rate levels.
Speculation around potential tariff negotiations by the Trump administration with China has also provided a supportive backdrop for the markets.