U.S. stocks rallied on Thursday, with the Dow and S&P 500 posting their eighth straight session of gains after strong results from megacaps Microsoft and Meta eased concerns about artificial intelligence spending. Canadian stocks ended slightly lower, however, as gold mining shares fell.
Microsoft surged 7.6% and closed at its highest level since late January, driven by an upbeat quarterly growth forecast for its cloud-computing business Azure. The gains briefly pushed Microsoft above Apple to become the world’s most valuable company.
Meta Platforms gained 4.2% and closed at its highest since April 9 after posting higher-than-expected revenue on the back of a strong advertising performance.
The results helped allay fears the massive spending on AI in recent years would not be rewarded, and eased concerns that President Donald Trump’s tariffs could dent economic growth.
“It’s nice that the day is being carried by earnings rather than just talking about tariffs for a second, so it’s a little refreshing in that regard that we’re talking about economic data and earnings,” said Lamar Villere, Portfolio Manager with Villere & Co in New Orleans.
“Certainly when you see a company of Microsoft’s size, Meta’s size, putting up great earnings, you would believe that their run is not over.”
The Dow Jones Industrial Average rose 83.60 points, or 0.21%, to 40,752.96, the S&P 500 gained 35.08 points, or 0.63%, to 5,604.14 and the Nasdaq Composite gained 264.40 points, or 1.52%, to 17,710.74.
Repercussions from frequent shifts in U.S. trade policy have hung over a solid earnings season so far, with many companies slashing or withdrawing their profit outlooks. S&P 500 first-quarter earnings are seen growing 12.9% on an annual basis, per LSEG data, up from the 8% growth rate seen on April 1.
After the closing bell, fellow heavyweight Amazon.com fell nearly 4% after its earnings as growth in its cloud unit lagged, while “Magnificent Seven” peer Apple was also due to report after the closing bell.
Eight straight sessions of gains marked the longest run for the Dow in a year and the longest for the S&P since August.
Tech rose 2.2% and communication services rose 1.6%, leading sector gains.
U.S. economic data painted a mixed picture. Weekly jobless claims, the latest in a string of labor market data this week ahead of Friday’s government payrolls report, showed layoffs increased more than expected last week, potentially hinting at a pick-up in job cuts following tariffs.
ISM PMI data showed U.S. manufacturing contracted further in April, though slightly less than economists polled by Reuters had expected. Input prices were elevated.
That followed Wednesday’s data showing the U.S. economy contracted for the first time in three years in the last quarter.
The Toronto Stock Exchange’s S&P/TSX composite index ended down 46.13 points, or 0.2%, at 24,795.55. On Tuesday, it posted its highest closing level in four weeks at 24,874.48.
In domestic economic news, Canadian manufacturing activity contracted in April at the steepest rate since shortly after the start of the COVID-19 pandemic as the uncertain nature of U.S. trade policy weighed on production and new orders.
The materials group, which includes metal mining shares, fell 2.4% as unwinding of safe-haven bets led to gold dropping to a two-week low.
Shares of Bombardier Inc lost 9.4% after the business jet manufacturer reported first-quarter revenue that fell slightly short of investor expectations.
The TSX technology sector rose 0.7%, helped by a gain of nearly 5% for the shares of electronics firm Celestica.
Energy was up 0.9% in Toronto as the price of oil settled 1.8% higher at US$59.24 a barrel.
In U.S. stock action, Eli Lilly reported quarterly results that topped expectations, but shares tumbled 11.7% after CVS Health’s decision to drop Lilly’s obesity drug Zepbound from some lists of medicines it covers for reimbursement. The healthcare sector slumped 2.8% as the worst performer on the session.
McDonald’s also reported earnings and shares declined 1.9% to cap gains on the Dow after posting a surprise drop in first-quarter global sales.
Mobile chip designer Qualcomm plunged 8.9% after it forecast a hit to revenue from the trade war.
Advancing issues outnumbered decliners by a 1.31-to-1 ratio on the NYSE and by a 1.19-to-1 ratio on the Nasdaq. The S&P 500 posted 11 new 52-week highs and four new lows while the Nasdaq Composite recorded 45 new highs and 66 new lows. Volume on U.S. exchanges was 16.15 billion shares, compared with the 19.56 billion average for the full session over the last 20 trading days.
Reuters, Globe staff