U.S. Stocks Rise as Earnings and Lower Oil Prices Support Sentiment
U.S. equities traded mostly higher on Thursday, supported by strong corporate earnings and easing oil prices. Gains were led by major tech and industrial names, while investors also digested fresh economic data and central bank signals.
By 12:28 ET (16:28 GMT), the S&P 500 rose 0.5% to 7,173.09, while the Dow Jones Industrial Average jumped 1.5% to 49,585.83. The NASDAQ Composite remained volatile, last up 0.2% at 24,718.84.
Big Tech Earnings Highlight AI Spending Surge
Results from several members of the “Magnificent 7” provided insight into the ongoing artificial intelligence investment cycle.
Alphabet led the group, with shares surging more than 7% to a record high, driven by stronger-than-expected cloud revenue.
Amazon initially hit a record high but later fell 1.4%, despite reporting its fastest AWS revenue growth since 2022.
Microsoft met expectations on cloud revenue and projected stronger growth later in the year, though its shares dropped 5.5%.
Meta Platforms declined sharply, falling 9% after announcing a significant increase in planned 2026 capital expenditures.
AI Investment Race Intensifies
Combined spending by these tech giants reached a record $130.65 billion in Q1, a 71% increase year-on-year, largely directed toward building AI-driven data center infrastructure.
Analysts note that markets are increasingly focused on the return on these massive AI investments, rather than just the scale of spending.
Caterpillar Boosts Dow with Strong Outlook
Outside of tech, Caterpillar surged 10.2%, providing a major lift to the Dow. The company raised both its annual and long-term revenue forecasts, reinforcing optimism around industrial demand.
Oil Prices Retreat After Volatile Spike
In commodities, Brent crude prices pulled back after a sharp spike triggered by geopolitical developments.
Reports indicated that Donald Trump is set to receive a briefing on potential new military actions against Iran. While oil initially surged above $126 per barrel, it later dropped 3.4% to around $114.
Despite the pullback, oil prices remain significantly above pre-conflict levels, raising concerns about inflationary pressures globally.
Federal Reserve Holds Rates Amid Internal Divisions
The Federal Reserve kept interest rates unchanged at 3.50%–3.75%, but the decision revealed growing disagreements among policymakers, with four officials dissenting.
Fed Chair Jerome Powell also confirmed he will remain on the board after stepping down as chair, an unusual move that could influence future policy direction.
Inflation and Growth Data Paint Mixed Picture
Economic data released Thursday showed that inflation remains elevated. The core PCE price index rose 0.3% month-on-month, while annual inflation reached 3.2%, with headline inflation at 3.5%.
At the same time, U.S. GDP growth rebounded to 2.0% in Q1, up from 0.5% in the previous quarter, although slightly below expectations.
Labor Market Remains Strong
The labor market continues to show resilience, with initial jobless claims falling to 189,000, the lowest level since 1969, signaling ongoing strength in employment conditions.
Outlook: Growth vs Inflation and Geopolitical Risks
While solid earnings and economic growth are supporting equities, investors remain cautious. Rising energy prices, persistent inflation, and geopolitical tensions—particularly the Iran conflict—could introduce volatility in the coming months.
