Microsoft and Meta Surge, Boost Wall Street Gains/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Microsoft and Meta Platforms led Wall Street higher Thursday following robust earnings reports that surpassed analyst expectations. The S&P 500 inched closer to its record high, boosted by optimism around AI and cloud growth. However, economic concerns persist due to tariffs, rising unemployment claims, and fears of stagflation.
Microsoft and Meta Surge, Boost Wall Street Gains: Quick Looks
- Microsoft stock soared 10.2% after strong cloud and AI-driven revenue
- Meta Platforms rose 6.4%, driven by AI-powered advertising gains
- S&P 500 up 0.8%, Nasdaq jumped 1.9%, Dow added 124 points
- CVS and other firms posted better-than-expected Q1 earnings
- GM cut 2025 profit forecast due to $4-5 billion tariff impact
- McDonald’s fell after reporting weak U.S. sales growth
- Jobless claims rose; investors eye April jobs report Friday
- Fears of stagflation linger amid inflation and economic slowdown
- 10-year Treasury yield dropped to 4.14% as rate-cut hopes grow
- Global markets mixed; Tokyo’s Nikkei 225 up 1.1%
Deep Look: Microsoft, Meta Earnings Spark Wall Street Rally Despite Economic Headwinds
NEW YORK — Wall Street climbed higher Thursday, buoyed by blockbuster earnings from Microsoft and Meta Platforms that reassured investors about the strength of Big Tech amid economic uncertainty. The S&P 500 gained 0.8% in early trading, setting up its longest winning streak since August. The Nasdaq composite soared 1.9%, and the Dow Jones Industrial Average added 124 points, or 0.3%.
The rally was powered largely by renewed investor confidence in artificial intelligence and cloud computing, which continue to drive growth for tech giants.
Microsoft and Meta Drive Tech Momentum
Microsoft shares jumped 10.2% after the company reported better-than-expected revenue growth fueled by its cloud computing and AI segments. The tech behemoth said overall revenue rose 13% year-over-year, underscoring its dominant position in the enterprise software and cloud markets.
Meta Platforms, the parent company of Facebook and Instagram, also beat analyst estimates for both revenue and profit. The company credited AI-powered tools for driving a rebound in its advertising business. Its stock surged 6.4% in early trading.
These results offered relief to investors after months of volatility and contributed significantly to the S&P 500’s recent rebound. The index now sits within 9% of its all-time high, after narrowly avoiding a 20% correction earlier this year.
Broader Corporate Earnings Mostly Positive
Other companies joined the parade of stronger-than-expected quarterly earnings. CVS Health reported solid profits, contributing to the broader market’s upbeat tone. The flow of positive earnings reports over the past week has helped stabilize investor sentiment, though uncertainties remain.
Still, not all news was good. General Motors downgraded its profit outlook for 2025, citing an expected $4 billion to $5 billion hit from new tariffs. The automaker said it plans to offset about 30% of the impact, but the announcement sent GM shares down 0.3%.
McDonald’s also disappointed Wall Street, dropping 1.3% after reporting weaker-than-expected U.S. sales. While profits edged past estimates, a key performance metric for domestic locations posted its sharpest decline since 2020, suggesting inflation and economic unease are impacting consumer behavior.
Economic Concerns Linger: Jobs and Stagflation
Thursday’s positive trading came amid mixed signals about the broader economy. The Labor Department reported an unexpected rise in jobless claims, adding to recent data showing a cooling job market. These reports set the stage for Friday’s more comprehensive April employment update.
At the same time, fears of stagflation—a toxic mix of stagnating growth and persistent inflation—continue to weigh on investor sentiment. With inflation still elevated and the economy slowing, some analysts worry the Federal Reserve has limited tools to address both challenges simultaneously.
“Stagflation is a worst-case scenario for policymakers,” said one analyst. “The Fed can’t fight inflation and stimulate growth at the same time without worsening one or the other.”
Bond Yields Fall as Rate-Cut Hopes Rise
Traders responded to the economic signals by increasing bets that the Fed will resume interest rate cuts later this year. The yield on the 10-year Treasury dropped to 4.14% from 4.17% on Wednesday, reflecting expectations for looser monetary policy aimed at cushioning the economy.
Wednesday’s data offered a glimmer of hope as the Fed’s preferred inflation gauge showed a modest slowdown in March. That data, coupled with weak job market signals, could tip the balance in favor of rate cuts in the months ahead.
Global Markets Mixed
Trading was muted in many international markets due to May Day holidays. However, Japan’s Nikkei 225 index rose 1.1% after the Bank of Japan left its key interest rate unchanged, aligning with market expectations.
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