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Financial Markets 05/01 09:38
NEW YORK (AP) -- Microsoft and Meta Platforms are driving Wall Street higher
on Thursday after profits for the Big Tech companies at the start of the year
turned out to be even bigger than analysts expected.
The S&P 500 was up 1% and heading for an eighth straight gain, which would
be its longest winning streak since August. The Dow Jones Industrial Average
was up 248 points, or 0.6%, as of 10:20 a.m. Eastern time, and the Nasdaq
composite was 1.8% higher.
Microsoft jumped 9% after the software giant said strength in its cloud
computing and artificial intelligence businesses drove its overall revenue up
13% from a year earlier.
Meta, the parent company of Facebook and Instagram, also topped analysts'
targets for revenue and profit in the latest quarter. It said artificial
intelligence tools helped boost its advertising revenue, and its stock climbed
5.3%.
CVS Health, Carrier Global and a bevy of other companies also joined the
stream of better-than-expected profit reports that have helped steady Wall
Street over the last week. The S&P 500 is back to within 8.5% of its record set
earlier this year, after briefly dropping nearly 20% below the mark.
Still, plenty of uncertainty remains about whether President Donald Trump's
trade war will force the economy into a recession. A couple mixed reports on
the U.S. economy Thursday followed up on several recent updates that have
suggested it's weaker than expected.
One of Thursday's reports said more U.S. workers filed for unemployment
benefits last week than economists had forecast, setting the stage for a more
comprehensive report on the job market arriving Friday. A separate update said
U.S. manufacturing activity was better last month than economists expected,
though it still contracted again.
And even though companies have been reporting better profits for the first
three months of the year than analysts expected, many CEOs are remaining
cautious about the rest of the year.
General Motors cut its forecast for profit in 2025, for example. It said
it's assuming it will feel a hit of $4 billion to $5 billion because of
tariffs. GM's stock nevertheless rose 2%. The automaker said it expects to
offset at least 30% of the tariff impact.
McDonald's fell 1.3% after reporting weaker revenue for the latest quarter
than analysts expected, even though its profit was slightly above forecasts. An
important underlying measure of performance at its U.S. restaurants had its
worst decline since 2020, when COVID shuttered the global economy. McDonald's
CEO Chris Kempczinski said consumers "are grappling with uncertainty."
McDonald's joined Chipotle and other restaurant chains that have seen
customers get more cautious amid all the unknowns about the economy and
inflation that's still higher than many people would like.
Such conditions are raising the threat of a worst-case scenario called
"stagflation," where the economy stagnates yet inflation remains high. It's so
hated because the Federal Reserve has no good tools to fix both problems at the
same time. If the Fed were to try to help one problem by adjusting interest
rates, it would likely make the other worse.
Some encouraging news on inflation arrived Wednesday, when a report said
that the measure of inflation the Fed likes to use slowed in March.
In the bond market, Treasury yields swiveled following Thursday's mixed
economic reports. The yield on the 10-year Treasury fell below 4.13% after the
worse-than-expected update on joblessness, but it later trimmed its losses
following the better-than-expected report on manufacturing. It pulled back to
4.19%, up from 4.17% late Wednesday.
In stock markets abroad, trading was closed in many countries for May Day,
or international Labor Day holidays.
Tokyo's Nikkei 225 rose 1.1% after the Bank of Japan kept its benchmark
interest rate unchanged, as many investors expected.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
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