Microsoft and Meta Platforms drove Wall Street higher on Thursday, as both tech giants reported better-than-expected profits for the start of the year. The S\&P 500 rose 0.6%, marking its eighth consecutive gain, the longest winning streak since August. The Dow Jones Industrial Average gained 83 points, or 0.2%, and the Nasdaq composite jumped 1.5%.
Microsoft saw a 7.6% rise in its stock after reporting a 13% increase in overall revenue, driven by its cloud computing and artificial intelligence (AI) businesses. Meta, the parent company of Facebook and Instagram, also exceeded analysts’ expectations for revenue and profit, with AI tools helping boost advertising revenue, resulting in a 4.2% stock gain.
These two companies are major players within the S\&P 500 and other indexes, influencing the market significantly due to their size. They were joined by other companies like CVS Health and Carrier Global, which also posted better-than-expected profits, helping to stabilize Wall Street. The S\&P 500 is now just 9% away from its record high set earlier this year, after previously dropping nearly 20%.
However, there is still uncertainty around the economic outlook, particularly regarding the potential impact of President Trump’s trade war. Despite strong earnings reports, many CEOs remain cautious about the rest of the year. For example, General Motors (GM) lowered its profit forecast for 2025, predicting a \$4 billion to \$5 billion hit from tariffs, though it expects to offset at least 30% of that impact. GM’s stock fell 0.4%.
McDonald’s also faced challenges, falling 1.9% after reporting weaker-than-expected revenue, despite slightly surpassing profit expectations. An important performance metric for its U.S. restaurants showed the worst decline since 2020, when the COVID-19 pandemic hit. CEO Chris Kempczinski noted that consumers are grappling with uncertainty, a sentiment echoed by other restaurant chains like Chipotle, where customers are becoming more cautious amid ongoing economic concerns and high inflation.
Economic data released on Thursday was mixed, adding to the market’s concerns. One report showed that more workers filed for unemployment benefits than anticipated, setting up for a more comprehensive jobs report to be released on Friday. However, another report showed that U.S. manufacturing activity was better than expected, although it still contracted.
On Wall Street, there is concern about the possibility of “stagflation,” where the economy stagnates while inflation remains high. The Federal Reserve faces a challenging situation, as its interest rate adjustments could either worsen inflation or economic stagnation, depending on which problem it tries to address.
On a more positive note, a report on inflation indicated that the measure the Fed prefers slowed in March. In the bond market, Treasury yields fluctuated following the economic reports. The 10-year Treasury yield initially dropped below 4.13% after the unemployment data, but later rose to 4.21% after the better-than-expected manufacturing report.
The stock market maintained its gains through the day, with the S\&P 500 closing at 5,604.14, up 35.08 points. The Dow Jones rose 83.60 points to 40,752.96, and the Nasdaq increased by 264.40 points to 17,710.74. Meanwhile, many foreign stock markets were closed due to May Day, or International Labor Day holidays.
In Japan, the Nikkei 225 index rose 1.1% after the Bank of Japan decided to keep its interest rate unchanged, as expected. There was also optimism in the markets due to hopes that Trump might eventually ease some of his tariffs after striking trade deals with other countries. A blog from China’s state broadcaster suggested that the Trump administration has been seeking contact with China to start negotiations over tariffs.
