Caterpillar stock popped 10% after a strong earnings report, while Meta and Microsoft stock fell on AI spending concerns
The S&P 500 reached a new all-time intraday high on Thursday, while the Dow Jones Industrial Average added 730 points, or 1.5%. The Nasdaq $NDAQ Composite rose 0.2%.
Shares of Caterpillar $CAT surged 10%, providing the biggest lift to the Dow, after the heavy-equipment maker beat quarterly earnings expectations, lifted its full-year revenue guidance, and reinforced its reputation as a proxy for the health of the global economy.
Technology stocks moved in the opposite direction. Weak subscriber growth and an upward revision to Meta $META's capital spending plans sent that stock down 9%. Microsoft $MSFT shed 5% after projecting that its outlays would climb to $190 billion, a figure executives attributed to elevated memory costs.
Speaking with CNBC, Facet chief investment officer Tom Graff said the megacap tech earnings season had not resolved investors' core anxieties. "What was most important on the ['Magnificent Seven'] earnings is that we didn't learn anything," he said. "The worry has been for months now that, 'Hey, they're all spending a lot, and that's great, and that's flowing through to earnings of other companies like Nvidia $NVDA and whatnot, but at the same time, the [return on investment] is not quite there."
The question of whether massive AI outlays will ultimately yield the kind of profitability associated with software businesses remains unresolved, Graff said. "Something that we're just going to keep wrestling with until we know one way or the other is: Does this AI spend at some point turn into software-like margins, or does it not really and we need to rethink these multiples?"
Thursday's session also brought new economic data. First-quarter GDP came in at an annualized rate of 2%, according to Commerce Department data released Thursday — an improvement over the prior quarter's 0.5% reading but short of the 2.2% analysts had projected.
Despite Thursday's pressure on tech stocks, all three major indexes remain on course for a strong April. April is shaping up as a standout month across all three benchmarks: the S&P 500 is up roughly 10%, a monthly haul not seen since November 2020; the Nasdaq $NDAQ has surged about 13%, its best April showing since 2020; and the Dow has gained more than 6%, topping any monthly performance for the index since November 2024.
Crude markets gave back recent gains, with Brent futures sliding roughly 3% to just above $114 a barrel while WTI futures pulled back about 2% to just above $104.
