Dow Jones and Nasdaq to rebound as Alphabet and Amazon earnings welcomed
10.20m: Data dump
Lots of US data out today, including GDP and consumer spending.
GDP came in at 2% year-on-year, lower than the 2.3% consensus forecast.
The Federal Reserve’s favoured core inflation measure, PCE, was 0.3% on the month or 3.2% year-on-year, in line with estimates.
The employment cost index rose 0.9% quarter-on-quarter, above the consensus 0.8%,
Initial jobless claims fell sharply to 189k, below the consensus 212k.
Consumer spending grew only 1.6% in the first quarter after 1.9% at the end of 2025.
“As such, this paints a rather mixed picture of the state of the economy in the lead up to and early start of the Middle East conflict,” says ING.
Looking at GDP, the 2% growth follows a 0.5% outcome in the fourth quarter 2025, both of which were weaker than the market was anticipating.
With the government shutdown in October subtracting from headline growth, with the resumption adding back most of this, “it is probably a good idea to take an average of the headline growth for the two quarters, which at 1.25%, is a notable slowdown on recent years.”
ING notes that a big rebound in imports led to net trade subtracting 1.3pp from headline GDP growth.
Drawing on various recent updates, around Yardeni Research says: “Consumer spending doesn’t seem to have let up despite higher gas prices and greater geopolitical uncertainty stemming from the war in the Middle East.
“That’s the view from the vantage points of both Hilton and Visa execs.”
“Concerns about the strength of consumer spending have been growing since the Iran war erupted and energy prices surged. But they’ve proved unfounded so far.
“The latest evidence that consumers have continued their spendthrift ways comes from the top brass at Visa and Hilton Worldwide Holdings.
“Both executive teams reported strong March-quarter results, upped their full-year earnings guidance, and described consumers spending and traveling apace despite higher gasoline prices and geopolitical uncertainties.”
10am: Dow led up by Caterpillar, while Nasdaq gragged by Meta
It was a lopsided start on Wall Street, with the Dow opening up 0.8% and the Nasdaq down 0.2%, with the S&P in the middle, up 0.1%.
Dragging down the Nasdaq were falls of 9.3% for Meta Platforms and 3.8% for Microsoft.
Over on the Dow, just over half the 30 stocks opened in green, led by an 8.3% leap for Caterpillar, followed by sub 2% gains for Walmart and Verizon.
8am: Stock gains expected
US stocks are expected to rise on Thursday, as investor confidence was boosted by a well-received set of earnings from three of the four ‘Magnificent Seven’ tech giants, offsetting concern about a further surge in oil prices.
Dow Jones futures were up 0.6%, with gains of 0.5% and 0.3% predicted for the Nasdaq and the S&P 500.
The tone is being set by the busy round of after-hours tech earnings.
According to market reaction, results from Microsoft, Amazon and Alphabet were broadly strong, particularly in cloud computing, which continues to be a key driver of growth as companies invest heavily in artificial intelligence infrastructure.
Alphabet Inc (NASDAQ:GOOG) jumped sharply after beating expectations, with the premarket gain now 9.2%. Amazon.com Inc (NASDAQ:AMZN) delivered its fastest cloud growth in more than three years, pushing its shares up 3%.
Microsoft Corp (NASDAQ:MSFT) shares are down 1.7% in premarket trading, despite reporting 39% growth in its Azure cloud unit, reinforcing the link between AI spending and revenue generation.
Meta Platforms Inc (NASDAQ:META) was the outlier, down 9.2% premarket, after flagging $135-145 billion of spending, raising concerns about the scale and focus of its investment strategy.
The positive tech backdrop is helping offset macro concerns. Oil prices remain elevated, with WTI crude having surged above $110 a barrel overnight, keeping inflation risks in focus and limiting broader market enthusiasm. Prices have eased since the early hours, with futures contracts rolling over to the next month.
“The S&P 500 can extend its advance to new all-time highs after earnings from hyperscalers offered a positive AI narrative, Wall Street’s most potent driver,” said market analyst Nikos Tzabouras at Tradu.
He said markets had been betting that the Middle East conflict would not derail the march of AI, and the results “vindicated that view”, with commitments to AI infrastructure spend showing no signs of wavering.
“Coupled with mostly strong growth pointing to tangible AI monetisation, the results could go a long way to quashing fears over ballooning capital expenditure.”
Meanwhile, Meta, he said, offers “a cautionary tale”.
On today’s earnings slate, Apple headlines after the close, while Eli Lilly, Mastercard, Caterpillar, Merck and ConocoPhillips report before the open, with further after-hours updates due from Amgen, SanDisk, Western Digital and Stryker.