NEW YORK — Major U.S. stocks experienced an upward trend on Thursday, primarily fueled by solid earnings reports from prominent companies such as Tesla, IBM, and Meta Platforms. This surge led to a 0.5% increase in the S&P 500, with four out of five stocks within the index making gains. The Dow Jones Industrial Average saw an addition of 168 points, equivalent to 0.4%, while the Nasdaq composite registered a 0.3% rise.
The rise in the stock market was significantly influenced by Meta Platforms, which experienced a 1.6% increase following its earnings announcement that exceeded analyst expectations for the latter half of 2024. Additionally, the company emphasized its commitment to artificial intelligence (AI), stating it would continue investing in this area, which helped to alleviate fears stirred by the news of a Chinese company named DeepSeek. DeepSeek announced it had developed a large language model capable of competing with established systems without relying on high-end chips, provoking uncertainty about the necessity of expected investments in AI technology.
The AI trend has been elemental in driving the U.S. stock market to attain record highs in recent years. However, concerns regarding the impact of these developments on specific stocks have been pronounced, particularly for Nvidia, a company that has become a benchmark in the AI boom. While Nvidia’s stock spent a significant portion of the day in the red, it eventually closed up 1%, contributing as one of the stronger forces for the S&P 500.
Conversely, shares of Microsoft dropped by 6.2% despite surpassing profit expectations for the latest quarter. The dip was largely attributed to slower-than-anticipated growth in its cloud computing sector, a critical component of its AI strategy. Microsoft CEO Satya Nadella acknowledged the innovations introduced by competitors like DeepSeek, mentioning that while it is advantageous to see efficiency and price reductions in AI development, it will enable users to consume more and stimulate app development.
Companies face mounting pressure to sustain robust profit figures amidst rising stock prices that have been impacted by increasing bond yields. Higher interest rates on bonds have disincentivized investors from paying premium prices for stocks.
As Treasury yields continue to climb, concerns about persistent inflation above the Federal Reserve’s target of 2% remain. This rise has been attributed to a robust U.S. economy along with apprehensions regarding potential policies from President Donald Trump. On Thursday, Treasury yields were relatively stable, following a report that indicated a solid growth rate for the U.S. economy at the end of 2024, albeit slightly below economists’ predictions. The yield on 10-year Treasury bonds marginally decreased to 4.52% from 4.53% the previous day.
According to Gregory Daco, chief economist at EY, the report highlighted a balanced “Goldilocks” economy characterized by steady growth. However, he cautioned that various uncertainties from Washington, especially regarding fiscal policies, tariffs, and immigration laws, could disrupt this balance.
Treasury yields also experienced some decline as the European Central Bank implemented a rate cut aimed at invigorating its sluggish economy. Meanwhile, the Federal Reserve has been making reductions to its primary rate since September to bolster the U.S. economy, though it decided to maintain current rates during a recent meeting. Fed Chair Jerome Powell indicated further adjustments would depend on clear signs of a slowdown in inflation or a tightening job market.
Despite a weak quarterly profit report, Tesla shares increased by 2.9%. CEO Elon Musk announced plans for Tesla to offer its unsupervised “full self-driving” technology as a paid feature beginning in Austin this June. IBM shares soared by 13% after exceeding profit projections; CEO Arvind Krishna highlighted their expanding portfolio related to generative AI, forecasting at least 5% revenue growth for the year.
In contrast, UPS stocks plummeted by 14.1%, despite reporting stronger-than-expected profits. The company revealed that its major client, Amazon, would decrease its shipping volume by over 50% by the latter half of 2026. American Airlines saw a decline of 2.5% following its involvement in a recent incident involving an American Eagle flight and an Army helicopter near Washington, an event that is now under investigation.
Overall, the S&P 500 rose by 31.86 points to reach 6,071.17, while the Dow Jones Industrial Average gained 168.61 points, climbing to 44,882.13. Lastly, the Nasdaq composite added 49.43 to close at 19,681.75. Internationally, stock indexes advanced in Europe, while Japan’s Nikkei 225 increased by 0.3%. Several Asian markets remained closed for the ongoing Lunar New Year festivities.
