John Gorman, a trader, is seen working on the floor of the New York Stock Exchange. (Photo: Richard Drew/AP)
Wall Street nudged higher on Thursday, powered by gains in tech giant Alphabet and a renewed rally in artificial intelligence stocks. Despite some major pullbacks in big-name companies like Tesla, the market still managed to close with modest record highs.
The S&P 500 rose 0.1%, marking yet another all-time high, while the Nasdaq Composite climbed 0.2%, also reaching a new record. However, the Dow Jones Industrial Average dipped 316 points, or 0.7%, weighed down by losses in other sectors.
Alphabet’s AI Bet Pays Off
Alphabet, the parent company of Google and YouTube, saw its shares rise by 1% after reporting stronger-than-expected quarterly earnings. The company revealed plans to pour an additional $10 billion into artificial intelligence investments this year, bumping its AI-focused budget up to $85 billion. This move reassured investors that Alphabet is firmly committed to staying ahead in the AI race.
Alphabet’s performance also gave a boost to other tech players. Nvidia, a key player in the AI chip market, surged 1.7%. As the most valuable company on Wall Street, Nvidia’s gains significantly impacted the overall S&P 500 performance.
Tesla Drops Despite Meeting Expectations
On the flip side, Tesla shares tumbled 8.2%, holding back broader gains. While the electric vehicle maker posted spring results that met or slightly exceeded analyst forecasts, concerns remain. CEO Elon Musk’s political activities are reportedly pushing away potential customers. Musk also warned that the company could face several difficult quarters ahead, especially with upcoming cuts to U.S. EV incentives.
Winners and Losers Across the Board
Several companies that beat earnings expectations still saw their stock prices decline. Chipotle Mexican Grill reported strong profits, but its revenue didn’t meet investor hopes. As a result, its shares slid 13.3%. Similarly, IBM dropped 7.6% after concerns about slowing growth in its software division.
American Airlines also faced turbulence, losing 9.6% despite posting higher-than-expected profits. The airline warned of a possible summer quarter loss and offered a wide earnings forecast for the year, ranging from a 20-cent loss to an 80-cent gain per share—depending on how the economy performs.
Market Reactions Are Growing Sharper
According to Evercore’s Julian Emanuel, stock reactions have become more intense. Companies that significantly beat or miss earnings estimates are seeing stronger price swings than usual.
“Meme stocks” are back in the spotlight, too. Opendoor Technologies jumped 5.7% after an unusually volatile run—its shares moved by at least 10% in either direction for ten straight days.
Despite these wild swings under the surface, major market indexes have remained relatively calm. The S&P 500, for instance, hasn’t moved by 1% in either direction for over a month.
Bond Market Stays Steady
In the bond market, U.S. Treasury yields were mostly unchanged. The 10-year Treasury yield touched 4.44% before easing back to 4.40%. This came as new data showed fewer Americans applied for unemployment benefits last week—a sign that layoffs may be slowing.
Another report showed U.S. business activity picked up in July, beating economists' expectations. This reinforced investor confidence that the Federal Reserve will likely keep interest rates steady in its upcoming meeting—despite political pressure for cuts.
Global Markets Join the Rally
International markets also showed strength. Japan’s Nikkei index gained 1.6%, while London’s FTSE rose 0.8%, as global investors reacted to steady U.S. economic data and the European Central Bank’s decision to hold interest rates steady.
