Nasdaq and S&P 500 Approach Record Highs on Big Tech Optimism
U.S. stocks advanced on Thursday, with the Nasdaq Composite climbing 0.9% and the S&P 500 rising 0.5%, as investors reacted to strong earnings from Meta and Microsoft alongside a 90-day tariff extension granted to Mexico. The Dow Jones Industrial Average remained mostly flat, trailing the other indexes.
Meta shares surged 11% in morning trading after reporting better-than-expected earnings and guidance, despite continued investment in artificial intelligence. Microsoft shares jumped up to 8%, briefly pushing the company’s market capitalization past $4 trillion. These gains renewed confidence in Big Tech’s AI strategies and contributed to broader market momentum.
Investors Await Apple and Amazon Earnings for Next Catalyst
With the S&P 500 and Nasdaq nearing record levels, market attention is shifting to after-hours earnings from Apple and Amazon. As key members of the so-called “Magnificent Seven,” their results are expected to play a critical role in sustaining the current rally driven by optimism in the technology sector.
Investors are increasingly focused on the performance and outlook of large-cap tech companies, particularly those investing heavily in AI infrastructure. Meta and Microsoft’s earnings have reinforced that narrative, and the market is looking for confirmation from their peers to keep the upward trajectory intact.
Inflation Data and Fed Signals Add Uncertainty
The Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, showed price increases accelerated in June. Inflation remains above the central bank’s 2% target, complicating expectations for interest rate policy in the coming months.
The Federal Reserve left rates unchanged following its latest meeting, with two governors dissenting in favor of a rate cut. Fed Chair Jerome Powell emphasized that no decisions had been made regarding a possible September cut. As a result, market expectations for a rate reduction at the next meeting fell below 40%, down from 60% earlier in the week.
Mexico Reprieve and South Korea Deal Ease Trade Tensions
President Trump announced a 90-day extension on planned tariffs for Mexico, just ahead of a looming Friday deadline. The move allows additional time for trade negotiations and was welcomed by investors concerned about trade uncertainty.
The announcement follows a series of trade agreements, including a new pact with South Korea. Under the deal, South Korean imports to the U.S. will face a 15% tariff, while U.S. exports will be exempt from duties. Additionally, Seoul committed to $350 billion in U.S. investments and agreed to purchase American energy products. Trump shared details of the agreement on social media.
