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Wall Street kicked off May on an upbeat note, with U.S. stocks rebounding sharply Thursday following upbeat earnings from Microsoft and Meta Platforms, which reignited confidence in the artificial intelligence boom despite lingering macroeconomic and geopolitical pressures.
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The Dow Jones Industrial Average rose 246 points, or 0.6%, while the S&P 500 climbed 1.1%. The Nasdaq Composite, driven by outsized gains in tech, soared 2.1%, regaining levels not seen since early April—before President Donald Trump’s tariff escalation sent markets into a tailspin.
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The catalyst was a familiar one: Big Tech. Microsoft shares leapt 8.6%, while Meta jumped 4.8%, after both companies handily beat Wall Street estimates in their quarterly reports late Wednesday. Microsoft cited surging demand for AI infrastructure, with AI contributing 16 percentage points to Azure cloud growth, up from 13 points last quarter. Meta’s CEO Mark Zuckerberg noted that advertising resilience and strategic AI investments had positioned the company to “navigate macro uncertainty.”
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Other AI-linked names followed suit: Nvidia rallied 4.3%, Advanced Micro Devices climbed 1.2%, and Broadcom gained 3.5%. The information technology sector led the S&P 500, up 3%, as investors rotated back into growth amid stabilizing expectations for interest rates.
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“AI may not be tariff-proof, but it’s proving to be much more resilient than many assumed,” said Jed Ellerbroek of Argent Capital Management. “We’re only at the beginning of what looks like a steep growth curve for digital infrastructure.”
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The rally comes after a punishing April for markets. Both the S&P 500 and the Dow ended the month lower—down 0.8% and 3.2%, respectively—amid concerns over Trump’s renewed tariff strategy. The tech-heavy Nasdaq, however, eked out a 0.9% gain, powered by AI and cloud-related optimism.
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Trump’s early-April “reciprocal tariff” policy triggered a wave of volatility, briefly pulling the S&P 500 into bear market territory before partial rollbacks calmed investors. Now, with Apple and Amazon set to report earnings post-market Thursday, the AI narrative continues to dominate attention—even as trade and production dynamics remain unsettled.
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Meta and Microsoft’s results helped erase much of the damage done to the Nasdaq, which had plunged as low as 15,267 on April 8 but has since rebounded above 17,800.
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Yet, not all signals are flashing green. Weekly jobless claims unexpectedly jumped to 241,000, exceeding expectations and pointing to potential softening in the labor market. Combined with the 0.3% contraction in Q1 GDP—the first negative reading since 2022—investors remain wary ahead of Friday’s key nonfarm payrolls report.
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Beyond Big Tech, corporate results reflected the divergence in sector performance under tariff and inflation pressures.
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Wayfair gained nearly 2% after topping estimates with adjusted earnings of $0.10 per share versus expectations of a loss. Align Technology rose over 2% as well, buoyed by strong dental product sales—and noted that its key aligners are made in Mexico, not China, shielding it from tariff exposure.
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On the flip side, McDonald’s shares slipped after missing earnings expectations, with the fast-food giant citing a decline in foot traffic across income brackets. “People are just visiting less,” CFO Ian Borden told analysts, pointing to consumer strain driven by inflation uncertainty and trade war flip-flopping.
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Traders are now closely watching the Federal Reserve’s rate outlook, as well as signals from Beijing amid whispers that Washington has reopened informal channels for trade negotiations. Despite President Trump’s rhetoric, officials hinted that agreements with Japan and South Korea may be nearing completion—potentially setting a template for de-escalation with China.
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Still, sentiment remains fragile. Tesla, Amazon, and Apple—each with major global supply chains—remain vulnerable to shifting tariffs and investor scrutiny. Tesla also dealt with headlines on Thursday denying rumors of a CEO succession plan for Elon Musk, which briefly pressured the stock before stabilizing.
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