U.S. Stock Markets Rally on Strong Earnings Reports

U.S. Stock markets climbed higher on Thursday, marking a positive start to May. The surge was driven by robust earnings from leading AI firms, which significantly boosted investor confidence in equities. Additionally, the absence of negative news regarding tariffs and trade issues further enhanced market sentiment. All three major Stock indexes finished the day in the green.

Market Performance Overview

The Dow Jones Industrial Average (DJI) increased by 0.2%, closing at 40,752.96. This marked the index’s first eight-day winning streak since July 2024. Notably, 15 of the 30 components finished in positive territory, while the remaining 15 were in the negative zone.

The Nasdaq Composite closed at 17,710.74, up 1.5% or 264.40 points, thanks to strong performances from major technology companies. The S&P 500 climbed 0.6% to finish at 5,604.14, also achieving an eight-day winning streak for the first time since November 2024.

Within the S&P 500, eight out of 11 sectors closed positively, while three saw declines. The Technology Select Sector SPDR (XLK) rose 1.5%, whereas the Health Care Select Sector SPDR (XLV) decreased by 2.7%.

The CBOE Volatility Index (VIX) dipped 0.4% to settle at 24.60. Trading activity revealed a total of 16.15 billion shares traded, lower than the 20-session average of 19.56 billion. On the NYSE, advancers outnumbered decliners by a ratio of 1.31 to 1, and on Nasdaq, the ratio was 1.19 to 1 in favor of advancing issues.

Earnings Reports Highlight Strong Performance

Meta Platforms Inc. (META) reported first-quarter 2025 earnings of $6.43 per share, exceeding the Zacks Consensus Estimate by 23.18%. This figure represents a 36.5% surge year over year. Additionally, revenues reached $42.31 billion, which also surpassed the Zacks Consensus Estimate by 2.61% and increased 16.1% year over year. At constant currency, revenues soared by 19% year over year.

Microsoft Corp. (MSFT) announced third-quarter fiscal 2025 earnings of $3.46 per share, beating the Zacks Consensus Estimate by 8.13% and marking a 17.7% increase year-over-year. Revenues hit $70.06 billion, which was up 13.3% year over year and exceeded the Zacks Consensus Estimate by 2.46%. At constant currency, revenues grew by 15% year over year, reflecting strong demand for cloud and AI products.

Following the earnings reports, stock prices for Meta Platforms and Microsoft rose by 9% and 7.6%, respectively. Both companies currently hold a Zacks Rank #3 (Hold).

Economic Indicators Defy Expectations

The Institute of Supply Management (ISM) revealed that the manufacturing PMI (Purchasing Managers’ Index) for April fell to 48.7%, down from 49% in March. This reading is below the consensus estimate of 48.8%, signaling a contraction in manufacturing activities. However, the new orders index improved, rising to 47.2% in April from 45.2% in March. The employment index also increased to 46.5%, up from March’s 44.7%.

In construction, spending declined by 0.5% in March, a contrast to the consensus estimate of a 0.2% increase. The previous month’s figure was revised downward to 0.6% from 0.7%.

Initial claims for unemployment benefits rose by 18,000 to reach 241,000 for the week ending April 26, exceeding the consensus estimate of 225,000. Additionally, the previous week’s data was adjusted upward from 222,000 to 223,000. Continuing claims also increased, rising by 83,000 to 1.916 million—the highest level of insured unemployment since the week ending November 13, 2021. The previous week’s number was revised downward by 8,000 to 1.833 million.

Conclusion

Overall, the markets responded positively to strong earnings and favorable sentiment, offsetting some concerns raised by recent economic data. Investors remain cautiously optimistic as they navigate the latest financial landscape.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.