U.S. stock markets hovered near record highs Thursday, although the relative calm in overall indexes masked some significant turbulence beneath the surface. Shares of Alphabet climbed while Tesla tumbled, as investors reacted to a wave of corporate earnings reports.
The S&P 500 rose 0.3% in afternoon trading, not far from the record it hit just a day earlier. Meanwhile, the Dow Jones Industrial Average slipped by 174 points, or 0.4%, and the tech-heavy Nasdaq Composite gained 0.4% as of 2:21 p.m. Eastern time.
Alphabet, the parent company of Google and YouTube, rose 1.9% after posting stronger-than-expected quarterly profits. The company also announced a $10 billion increase to its annual capital expenditures, now totaling $85 billion, as it ramps up investment in artificial intelligence, including AI chips and infrastructure.
Alphabet’s performance helped buoy other AI-linked stocks, such as Nvidia, which rose 1.1%. Nvidia, now the most valuable company on Wall Street, remains a key driver of gains in the broader S&P 500.
On the downside, Tesla plunged 8.8%. Despite quarterly results that were mostly in line with analysts’ estimates, CEO Elon Musk’s commentary raised concerns. Musk emphasized Tesla’s growing focus on AI and robotaxi technology but also warned of potentially difficult quarters ahead. He attributed this to a “weird transition period” and noted the company may lose U.S. incentives.
The market has been on an extended upswing in recent weeks, bolstered by optimism that President Donald Trump may ease proposed tariffs through new trade agreements. Investors have also grown hopeful that the economy could sidestep a recession. However, concerns remain about soaring stock valuations, putting pressure on companies to deliver strong earnings to justify high prices.
Several companies missed that mark. Chipotle Mexican Grill sank 13.8% after its revenue growth missed expectations, despite posting better-than-expected profits. IBM fell 7.5%, weighed down by concerns over slowing growth in its software segment.
American Airlines dropped 8.5% even though it beat profit forecasts for the spring quarter. The airline issued a wide-ranging forecast for the full year that could see results swing between a slight loss and a modest profit, depending on how economic conditions evolve.
Julian Emanuel of Evercore noted that market reactions to earnings have been particularly sharp this season, with companies being heavily rewarded or punished depending on the size of their profit surprises or misses.
Some of the most dramatic moves have come from so-called “meme stocks” — highly volatile shares often driven by social media hype. Opendoor Technologies, for example, surged 11.4% and has now seen 10 consecutive days of 10% price swings in either direction.
Despite all the activity under the surface, broader market volatility has remained low. The S&P 500 hasn’t experienced a 1% daily move in the past month, a sign of relative stability.
In the bond market, U.S. Treasury yields held steady. The 10-year Treasury note briefly touched 4.44% early in the day before easing to 4.41%, compared to 4.40% the day before.
Economic data offered more encouraging signs. Weekly jobless claims fell, suggesting fewer layoffs, while S&P Global’s preliminary report on U.S. business activity showed stronger-than-expected growth in July.
These developments reinforced expectations that the Federal Reserve will leave interest rates unchanged at its upcoming meeting, even as President Trump continues to push for rate cuts. Similarly, the European Central Bank left its key rate steady Thursday, choosing to wait and assess the impact of Trump’s tariffs on the global economy.
International markets also saw gains. Japan’s Nikkei rose 1.6%, while London’s FTSE climbed 0.8%, leading broader gains across Asia and Europe.
Also Read:
Wall Street Climbs Toward Record Highs as Verizon Kicks Off Earnings Week with Strong Results
Wall Street Nears Record Levels on Strength of Tech and PepsiCo Stocks
