Tesla, IBM, Meta help push stock indexes higher
NEW YORK — Tesla, IBM and Meta Platforms helped lead most U.S. stocks higher on Thursday after a rush of profit reports from some of the country’s most influential companies.
The S&P 500 rose 0.5%, as four out of every five stocks in the index climbed. The Dow Jones Industrial Average added 168 points, or 0.4%, and the Nasdaq composite gained 0.3%.
Meta Platforms helped push indexes higher after rising 1.6%. The company behind Facebook and Instagram delivered a better profit for the end of 2024 than analysts expected. Perhaps just as importantly for the market, it also talked up its artificial intelligence efforts and said it will continue to invest in the space.
That calmed some of the worries created by a Chinese upstart, DeepSeek, when it said it developed a large language model capable of competing with the world’s best, without having to use top-flight chips.
That raised questions about whether all the investment expected for AI chips, data centers and electricity is really needed and sent a shock through markets at the start of the week.
The AI boom has been a primary reason for the U.S. stock market’s run to repeated records in recent years, and the threat has hit stocks like Nvidia particularly hard. The chip company that’s become the symbol of the AI frenzy spent most of Thursday lower, but it ended with a gain of 1% and was one of the strongest forces lifting the S&P 500.
Microsoft shares fell 6.2%, keeping indexes in check.
The Redmond, Wash.-based software giant topped analysts’ expectations for profit in the latest quarter, but the focus was instead on the slower than expected growth in its cloud computing business, which is a centerpiece of its AI efforts.
Microsoft Chief Executive Officer Satya Nadella also continued to talk up AI after DeepSeek’s disruption.
“DeepSeek had some real innovations,” he said, and it is good to have efficiency gains and lower prices in AI development because it “means people can consume more and there’ll be more apps written.”
The pressure is on companies to keep delivering stronger profits. That would help them offset the downward force their stock prices have felt from climbing yields in the bond market recently. When bonds are paying more in interest, investors aren’t as willing to pay high prices for stocks.
The report showed a “Goldilocks” economy at the turn of the year, one that was neither too hot nor too cold, according to Gregory Daco, chief economist at EY. But he warned many uncertainties from Washington could change things, including what it does with income tax rates, tariffs and immigration.
Yields felt some downward pressure after the European Central Bank cut its main interest rate in hopes of boosting the region’s stagnant economy.
In Washington, the Federal Reserve had also been cutting its main rate since September to help the U.S. economy, but it opted to hold steady on Wednesday.
Fed Chair Jerome Powell said it likely needs to see more evidence of a slowdown either in inflation or in the U.S. job market to lower rates further.
On Wall Street, Tesla shares rose 2.9% even though Elon Musk’s electric vehicle company reported a weaker profit for the latest quarter than analysts expected.
Musk asserted Tesla will offer unsupervised “full self-driving” technology to its customers as a paid service starting in Austin in June.
IBM shares rallied 13% after beating analysts’ expectations for profit.
CEO Arvind Krishna pointed to its growing book of generative AI business and said IBM expects its overall revenue to grow at least 5% this year.
All told, the S&P 500 gained 31.86 points to 6,071.17. The Dow Jones Industrial Average rose 168.61 to 44,882.13 and the Nasdaq composite added 49.43 to 19,681.75.
Information for this article was contributed by Yuri Kageyama and Matt Ott of The Associated Press.