Editor
Strong earnings from Meta and Microsoft, combined with an unexpected tariff break for Mexico, gave Wall Street a much-needed boost on Thursday, propelling the Nasdaq and S&P 500 toward new record highs.
Tech Titans Power Market Gains
Wall Street was buzzing with excitement Thursday morning, thanks to some impressive earnings reports from two of Silicon Valley’s biggest players. Meta and Microsoft both exceeded Wall Street’s expectations, reigniting investor enthusiasm for Big Tech’s ambitious foray into artificial intelligence.
Meta’s stock soared by 11% after the social media giant reported earnings that surpassed forecasts and provided optimistic guidance, even in the face of rising AI infrastructure costs. Investors seemed to overlook the hefty spending, instead focusing on the potential for growth.
On the other hand, Microsoft saw its shares jump as much as 8%, adding over $300 billion in market value in just one day and briefly pushing its market cap past the $4 trillion mark—an achievement previously only reached by Apple.
“These companies are changing the game in the AI race,” remarked Karen Liu, a senior equity analyst at Franklin Point Capital. “When you witness this kind of profitability alongside such significant R&D investment, it’s evident they’re not just burning through cash—they’re investing in their future dominance.”
The Nasdaq Composite rose by 0.9%, while the broader S&P 500 climbed 0.5%. In contrast, the Dow Jones Industrial Average remained mostly flat, held back by companies that aren’t as tech-focused.
Tariff Relief Buoys Market Mood
The bullish mood got a boost from an unexpected announcement by President Trump, who revealed a 90-day extension on tariffs for Mexican imports just hours before the Friday deadline. This move gives negotiators a bit more breathing room and calms immediate worries about a new trade conflict.
Earlier in the session, markets had been shaky due to trade uncertainties, but they bounced back with this news.
“It’s a classic Trump tactic—ratchet up the pressure, then ease off just enough to keep everyone on their toes,” remarked Anthony Molina, chief political strategist at Arcbridge Advisors. “For investors, even a short break is a lot better than waking up to the reality of a trade war.”
Additionally, the White House wrapped up a deal with South Korea late Wednesday. According to the agreement, Seoul will accept a 15% tariff on its exports to the U.S. while dropping duties on American goods. In exchange, South Korea has committed to investing $350 billion and purchasing U.S. energy products—part of a larger strategy by the Trump administration to reshape trade policy as a means of boosting industrial growth.
Inflation Still a Concern as Fed Holds Line
While the markets were celebrating positive corporate earnings and trade updates, new inflation figures brought a more cautious vibe to the scene.
The Fed’s go-to inflation gauge—the Personal Consumption Expenditures (PCE) index—indicated that prices continued to climb in June, keeping inflation stubbornly above the central bank’s 2% target. This news came just a day after the Federal Reserve decided to keep interest rates unchanged, although two governors voiced their disagreement, advocating for a more aggressive approach.
During a press conference on Wednesday, Fed Chair Jerome Powell pushed back against political calls for a rate cut in September. “No decisions have been made,” he stated firmly, seemingly contradicting President Trump, who had suggested that a rate cut was just around the corner.
The market certainly took notice. The likelihood of a rate cut in September dropped to 39% on Thursday, down from nearly 60% earlier in the week, according to CME Group’s FedWatch tool.
Eyes on Apple and Amazon
Investors are still trying to make sense of what’s happening in Big Tech. With Apple and Amazon set to announce their earnings after the market closes, everyone’s eager to see what they’ll reveal about consumer spending, cloud services, and advancements in AI.
“Meta and Microsoft may have set the stage,” Liu noted, “but we really need to hear from Apple and Amazon to determine if this rally is sustainable or just running out of steam.”v
Looking Ahead
With stocks hovering around all-time highs, the upcoming sessions could be crucial. Once again, the tech sector has shown itself to be the driving force behind market optimism, but inflation and trade uncertainties are still significant hurdles.
“AI is the rocket fuel,” Molina remarked. “But macro policy? That’s the gravity investors can’t escape.”
