Stock market today: Dow and S&P 500 rise, Nasdaq rise as 'Magnificent 7' results lift AI hopes

Yahoo Finance’s David Hollerith reports:

Marc Lipschultz, founder and co-CEO of Blue Owl (OWL), said Thursday that the firm has no plans of slowing its efforts to finance Big Tech’s AI spending.

Shares of the private credit heavyweight surged as much as 13% Thursday after the firm reported asset management growth during the quarter, driven by a 6% increase in the division that houses its data center financing and leasing business.

“We saw overnight, obviously, all the tech announcements … most notably, just about every single company talked about increasing their capex even more. Well, that just flows directly to our digital infrastructure business and our triple net lease business,” Lipschultz said.

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Gold (GC=F) futures jumped more than 1.5% on Thursday to hover near $4,630 per troy ounce. Bullion prices were on pace to notch their second consecutive month of declines.

Silver (SI=F) futures also rose to trade above $73 per ounce.

Reports that the US is considering renewed military action in the Middle East to speed up negotiations and reopen the Strait of Hormuz sent precious metals higher as the US dollar (DX-Y. NYB) eased.

Proving that the US economy really is the AI economy now, business investments contributed more to the first quarter’s 2% GDP growth than consumer spending, the traditional driver of economic power.

Consumer spending typically makes up roughly two-thirds of US economic activity. In the first quarter, consumer spending contributed 1.08 percentage points of growth. Business investment, however, contributed a larger 1.48 percentage points as the boom in artificial intelligence spending has lit a fire under the US economy.

On Wednesday, first quarter earnings reports from Meta (META), Microsoft (MSFT), Alphabet (GOOG), and Amazon (AMZN) upped capital expenditures projections further for four of the “Magnificent Seven” tech leaders. Going into the quarter, the high end of estimates put the group’s AI spending at around $670 billion this year. As of Wednesday night’s reports, that number is closer to $725 billion.

Rounding out contributions to GDP growth were 0.73 percentage points from government spending and investment and a 1.3 percentage-point loss from exports of goods and services.

Nvidia (NVDA) stock slipped as much as 4.5% on Thursday, creating a mixed picture for the semiconductor space.

The move comes after megacap hyperscalers reported earnings on Wednesday, upping their capex for data center infrastructure to $725 billion this year.

However, some of the Big Tech players are getting punished for that additional spend, with social media company Meta (META) and software and cloud giant Microsoft (MSFT) both falling 5% and 9%, respectively.

Investors may also be weighing rising competition against Nvidia, which has dominated the AI infrastructure space.

Amazon (AMZN) noted its internal chip business is booming, while Alphabet’s (GOOG, GOOGL) said it plans to sell its custom Tensor Processing Units (TPUs) to select customers.

The US economy grew 2% in the first quarter, according to real GDP data from the Bureau of Economic Analysis, showing that the strength of the AI boom and other growth stories have kept the economy largely on track.

Economists had been expecting growth of 2.3% in real GDP for the quarter. Even so, the first quarter’s 2% growth marks a strong turnaround from fourth quarter growth stymied by the longest shutdown of the federal government on record.

Personal consumption, responsible for roughly two-thirds of US economic activity, grew by 1.6% on the quarter, slightly underperforming the fourth quarter’s 1.9% growth but exceeding estimates of 1.4%.

Corporate investments in equipment — which includes information processing and industrial equipment — were especially strong in the first quarter, according to BEA data, rising 0.9% on the back of a boom in AI infrastructure development.

With the bulk of “Magnificent Seven” earnings in the rearview mirror, parts of the group are right back at the highs.

Alphabet (GOOG, GOOGL) and Amazon (AMZN) are both back at intraday records, a sign that investors are still rewarding the biggest platforms when results and AI positioning hold up.

Here are this morning’s intraday record highs:

Indices: Nasdaq 100 (^NDX)

Dow Jones Sectors/Industries: General Retailers, Commercial Vehicles/Trucks, Heavy Construction, Marine Transportation, Internet Services, Retailers

Industry/Style/Country ETFs: Oil Refiners (CRAK), Taiwan (EWT), Value (VLUE)

Consumer discretionary stocks: Amazon (AMZN)

Financial stocks: Central BanCo (CRC)

Industrial stocks: Caterpillar (CAT), Kirby (KEX), Powell Industries (POWL), Quanta Services (PWR), Trane (TT)

Energy stocks: TechnipFMC (FTI)

Tech stocks: Alphabet (GOOG, GOOGL), Intel (INTC), Micron (MU), Silicon Motion (SIMO), Sandisk (SNDK)

US stocks rose on Thursday after a slew of Big Tech earnings reports on Wednesday buoyed optimism for the AI trade and oil prices pulled back as futures contracts rolled forward.

The tech-heavy Nasdaq Composite (^IXIC) gained 0.2% following a lackluster Wednesday for Wall Street stocks and a slate of “Magnificent Seven” earnings. The Dow Jones Industrial Average (^DJI) climbed roughly 0.5%, while the S&P 500 (^GSPC) gained 0.2%.

Oil prices overnight reached their highest price since 2022, as Brent (BZ=F) crude June futures surged 7% to top $126 a barrel after Axios reported President Trump is considering further military action in Iran.

Apple is scheduled to report after the market closes, following reports from Alphabet (GOOG), Amazon (AMZN), Microsoft (MSFT), and Meta (META) on Wednesday.

PCE data released Thursday morning showed inflation holding above target. On the labor front, Americans filed 189,000 initial jobless claims in the week ended April 25, coming in below last week’s 215,000 claims.

Amazon’s AI spending problem may have a demand answer.

The company’s cloud backlog — future business Amazon has already contracted but has not yet turned into revenue — jumped to $364 billion in the first quarter, CEO Andy Jassy said on the company’s earnings call.

And that figure doesn’t include Amazon’s recently announced Anthropic deal for more than $100 billion.

That’s the key counterpoint to the cash-flow pressure that showed up in Amazon’s first quarter results. The company is spending heavily on data centers, chips, servers, and other infrastructure before it can collect the revenue from that capacity.

Jassy made that timing gap explicit on the earnings call, saying AWS has to lay out cash for “land, power, buildings, chips, servers, and networking gear” before it can monetize that spending. “Typically six to 24 months before we start [billing] customers,” he said.

But he also pushed back on the idea that Amazon is building without visibility.

The $364 billion backlog — reported by Amazon as a “remaining performance obligations” — excludes the recently announced Anthropic deal for more than $100 billion, Jassy said, adding that there is “reasonable breadth” in the backlog and that it is “not just one customer or two customers.”

That makes backlog the number to watch after Amazon’s earnings. If those contracts turn into revenue fast enough, the AI spending boom looks like a growth investment. If they don’t, investors are left staring at the cash drain.

The European Central Bank and the Bank of England voted to keep their target interest rates steady this morning, citing the war in Iran as a key economic stressor.

The ECB voted to keep the interest rates on the deposit facility, main refinancing operations, and the marginal lending facility unchanged at 2%, 2.15%, and 2.40%, respectively.

In a statement published alongside the ECB decision, the Governing Council said the Middle East conflict, which has stymied the global energy system, “led to a sharp increase in energy prices, pushing up inflation and weighing on economic sentiment.”

The Governing Council added, echoing Federal Reserve Chair Jerome Powell in his press conference yesterday, “The longer the war continues, and the longer energy prices remain high, the stronger is the likely impact on broader inflation and the economy.”

In the UK, the Bank of England’s Monetary Policy Committee voted to maintain the bank rate at 3.75% as policymakers attempt to steer the economy back toward 2% inflation.

“The impact on the economy and inflation will depend on how much energy prices go up and how long they stay raised,” the Monetary Policy Committee wrote in a statement released alongside the decision.

“Monetary policy cannot affect global energy prices; our job is to make sure that higher inflation does not persist and have long-lasting effects on the economy.”

Initial jobless claims fell to 189,000 in the week ended April 25, according to data released by the Department of Labor on Thursday, coming in below the previous week’s revised tally of 215,000 claims.

Economists had expected initial claims to be significantly higher at 212,000 for the week, according to consensus estimates compiled by Bloomberg.

Continuing claims, which track the unemployed population still seeking work, also fell to 1.76 million in the week ended April 18 compared to the previous week’s revised count of roughly 1.81 million continuing claims.

Economists had been looking for an increase in continuing claims, estimating roughly 1.82 million.

Prices rose by 0.7% in March over the previous month, according to Personal Consumption Expenditures (PCE) index data released Thursday by the Bureau of Economic Analysis.

The growth was in line with economists’ expectations of 0.7%, according to Bloomberg’s consensus estimates, nearly doubling February’s 0.4% increase.

“Core” PCE, which excludes the more volatile food and energy categories, rose 0.3% on the month. The print is in line with economists’ expectations for the Federal Reserve’s preferred inflation measure and slightly below February’s 0.4% gain.

On an annual basis, the headline and core PCE price indexes rose 3.5% and 3.2%, respectively, in March from the previous year, in line with expectations on both measures.

Meanwhile, personal income rose by 0.6% in March on a monthly basis, coming in sharply above the previous month’s 0.1% decline and doubling economist expectations of 0.3% growth.

Personal spending increased 0.9% from last month, coming in equal to expectations and above the previous month’s revised growth of 0.6%.

Semiconductor stocks rose on Thursday. Qualcomm (QCOM) surged 9% in premarket trading, while peers Broadcom (AVGO), Intel (INTC), and AMD (AMD) climbed higher as well.

Big Tech earnings from companies like Meta Platforms (META) and Microsoft (MSFT) showed hyperscalers plan to grow their capital expenditures on artificial intelligence infrastructure.

Wall Street sees the makers of the central processing units (CPUs) needed for agentic AI, such as Intel and AMD, as beneficiaries of the trade. The cost of memory and data storage has also benefited players like Sandisk (SNDK), Western Digital (WDC), and Seagate (STX), which rallied premarket following Seagate’s strong results.

Meanwhile, Qualcomm’s better-than-expected first quarter results also lifted the broader chip sector. The maker of smartphone processors said it sees the market for Chinese phones bottoming in the current quarter, a positive sign for the company. It also said it expects to ship custom silicon to an unnamed hyperscaler later this year.

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