Microsoft and Meta Platforms played a crucial role in lifting Wall Street on Thursday, as both tech giants reported outstanding profits at the beginning of the year, surpassing analyst predictions.
The S&P 500 showed a 0.6% increase, marking its longest winning streak since August with eight consecutive gains.
Meanwhile, the Dow Jones Industrial Average saw an addition of 83 points, or 0.2%, and the Nasdaq composite rose by 1.5%.
Microsoft’s shares surged by 7.6% after the company announced a robust 13% rise in overall revenue from the previous year, propelled largely by its cloud computing and artificial intelligence divisions.
Similarly, Meta, the parent company of Facebook and Instagram, exceeded revenue and profit targets in its latest quarter and reported that AI tools significantly enhanced its advertising revenue, resulting in a 4.2% climb in its stock value.
Being two of the most influential stocks in the S&P 500 and other indices due to their considerable size, their performance was part of a broader trend.
Companies like CVS Health, Carrier Global, and others joined the list of entities reporting better-than-anticipated profits, contributing to Wall Street’s recent stability.
The S&P 500 has now regained close to 9% of its record high from earlier this year after previously experiencing a near 20% decline.
Despite these optimistic figures, uncertainty looms over the impact of President Donald Trump’s trade policies, potentially leading to a recession.
Even with many firms exceeding profit expectations for the first quarter, CEOs remain cautious about the remainder of the year. For instance, General Motors has adjusted its profit forecast for 2025, anticipating a $4 billion to $5 billion impact from tariffs and planning to offset approximately 30% of that downturn.
As a result, GM’s stock dropped by 0.4%.
McDonald’s also faced challenges, with its stock falling by 1.9% after reporting lower-than-expected revenue for the quarter, although its profit marginally beat forecasts.
The company faced its worst performance drop in U.S. restaurants since 2020, attributing this to consumer uncertainty amid fluctuating economic conditions. CEO Chris Kempczinski noted that customers are cautious, a sentiment reflected across other restaurant chains like Chipotle.
The growing sense of economic uncertainty is supported by consumer surveys expressing increased pessimism about economic direction. Recent economic reports have shown mixed results, hinting at potential weakening.
Unemployment benefits claims exceeded predictions last week, ahead of a detailed job market report expected on Friday.
However, another report suggested U.S. manufacturing activity fared better than anticipated, though it still indicated contraction.
The fear of “stagflation,” a scenario in which the economy stalls while inflation remains high, continues to concern Wall Street. This dual challenge presents complications for the Federal Reserve, as measures to address one issue may exacerbate the other.
Encouragingly, a recent inflation report indicated a slowdown according to a measure favored by the Fed.
In the bond market, Treasury yields fluctuated following the latest economic news.
The yield on the 10-year Treasury initially dropped below 4.13% after increased jobless claims but recovered due to a positive manufacturing report, rallying to 4.21%, up from 4.17% on Wednesday.
Stock markets maintained steadiness throughout the day, ending with the S&P 500 up 35.08 points at 5,604.14, the Dow Jones Industrial Average up 83.60 to 40,752.96, and the Nasdaq composite gaining 264.40 to 17,710.74.
Internationally, many stock markets were closed for May Day, including several countries observing the Labor Day holidays.
Tokyo’s Nikkei 225 increased by 1.1% after the Bank of Japan maintained its interest rate, as predicted by investors.
Optimism regarding potential tariff reductions by President Trump, contingent on new trade deals, also bolstered markets.
Reports from China’s state media noted the U.S. administration’s efforts to initiate discussions over tariffs with the world’s second-largest economy via multiple channels.