Overview:
On Thursday, May 1, U.S. stocks continued their winning streak, with the Dow and S&P 500 marking their eighth consecutive day of gains. The rally was fueled by strong earnings from tech giants Microsoft and Meta, easing concerns about the impact of artificial intelligence (AI) spending and potential trade disruptions. Microsoft surged 7.6%, briefly surpassing Apple to become the world’s most valuable company, while Meta gained 4.2%, bolstered by strong advertising revenue.
Despite fears about AI investments and trade tariffs, these earnings reports helped alleviate investor concerns, shifting the focus back to strong corporate performance. The Dow, S&P 500, and Nasdaq all closed higher, with tech and communication services sectors leading the gains.
Fear & Greed Index:
Optimistic – Investor sentiment is boosted by robust earnings from key technology companies, while trade policy uncertainties remain in the background.
Key Indices (Closed Prices):
- Dow Jones Industrial Average: +0.21% at 40,752.96
- S&P 500: +0.63% at 5,604.14
- Nasdaq Composite: +1.52% at 17,710.74
Sector Performance:
- Winners:
- Technology: The sector gained 2.2%, driven by strong earnings from Microsoft and Meta.
- Communication Services: This sector rose 1.6%, buoyed by Meta’s solid performance.
- Losers:
- Healthcare: The sector was the worst performer, down 2.8%, as Eli Lilly’s disappointing news about its obesity drug and CVS Health’s decision to drop the drug from its reimbursement list weighed on sentiment.
Key Movers:
- Microsoft (MSFT): Surged 7.6%, driven by positive growth in its Azure cloud business.
- Meta Platforms (META): Rose 4.2%, with strong advertising revenue outpacing expectations.
- Amazon (AMZN): Fell nearly 4% after its earnings report showed weaker-than-expected growth in its cloud unit.
- Eli Lilly (LLY): Dropped 11.7% following news of its obesity drug Zepbound being removed from some insurance coverage lists.
- Qualcomm (QCOM): Fell 8.9% after it warned of potential revenue hits from the trade war.
Economic Data:
- Jobless Claims: Weekly jobless claims showed an unexpected increase in layoffs, suggesting a potential rise in job cuts amid trade uncertainties.
- ISM PMI: U.S. manufacturing contracted further in April, though less than expected, indicating continued challenges in the sector.
- GDP Data: The U.S. economy contracted in Q1 for the first time in three years, reinforcing concerns about the impact of tariffs on growth.
- Trade Tensions: Ongoing shifts in U.S. trade policy continue to affect investor sentiment, with companies adjusting their outlooks due to tariff impacts.
Outlook:
The stock market remains in an upbeat mood, with strong earnings from major tech companies alleviating some concerns about AI spending and trade wars. However, mixed economic data, including rising job cuts and a contracting manufacturing sector, suggests that economic growth may face headwinds. As the earnings season progresses, investors will continue to closely monitor corporate performance and geopolitical developments to gauge the health of the broader market.