Microsoft (MS) and Meta Platforms reported better-than-expected strong earnings, leading to a bullish close for the three major stock indexes on the New York Stock Exchange.
On the 1st (Eastern Time), the Dow Jones Industrial Average closed at 40,752.96, up 83.60 points (0.21%) from the previous session. The Standard & Poor's (S&P) 500 index rose 35.08 points (0.63%) to close at 5,604.14, while the Nasdaq Composite index finished trading at 17,710.74, up 264.40 points (1.52%).
The strong earnings from MS and Meta drove the stock market. MS announced that its first-quarter revenue was $70.07 billion, with an earnings per share (EPS) of $3.46. Both figures exceeded market expectations. Meta also reported first-quarter revenue of $42.31 billion and an EPS of $6.43, significantly surpassing market forecasts.
Following this news, both companies, which had surged during after-hours transactions the previous day, continued their momentum after the market opened. MS jumped nearly 8%, and Meta also rose over 4%.
Jed Ellerbrook, portfolio manager at Agent Capital Management, noted, "There are hardly any stocks completely free from the tariffs and trade war of President Donald Trump, but the artificial intelligence (AI) sector is affected much less than investors think," adding, "We are currently in the early stages of a very steep growth curve."
As MS demonstrated solid results in the AI sector, the stocks of other big tech firms also rose. Nvidia increased by nearly 3%, while Broadcom rose by over 2%. Alphabet also showed a gain in the 1% range.
News that the U.S. government approached the Chinese government for trade negotiations also boosted investor sentiment. The Chinese state-owned Central Television (CCTV)-affiliated social media platform "Weiyuantantian" reported on its account that "recently, the U.S. has been actively contacting China through various channels to discuss tariff issues."
Kevin Hassett, Chairperson of the White House Council of Economic Advisers, also said in an interview with CNBC that day, "We expect progress with China," adding, "I am pleased to see that last week, China lifted several tariffs imposed on U.S. products." He also mentioned, "News regarding tariffs will definitely come out before the end of today."
By sector, healthcare pharmaceuticals fell more than 2%, while technology rose nearly 3%. Communication services, discretionary consumer goods, energy, and industrials also rose by more than 1%.
The U.S. manufacturing sector continued to contract for two consecutive months, but the impact was offset as the results exceeded market expectations. The Institute for Supply Management (ISM) announced that the manufacturing Purchasing Managers' Index (PMI) for April was recorded at 48.7. Although it exceeded market expectations, it showed contraction for two consecutive months.
In the U.S., the number of new unemployment insurance claims increased more than expected over the past week. According to the Department of Labor, for the week ending April 26, the number of new unemployment insurance claims was reported at a seasonally adjusted 241,000, an increase of 18,000 from the previous week.
The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) fell 0.10 points (0.4%) to 24.6.