Futures contracts tied to the three major U.S. stock indexes surged late Wednesday, lifted by blowout earnings from Microsoft and Meta Platforms. Microsoft stocks soared almost 7% after the company reported stunning fiscal third-quarter numbers on Tuesday. The jump was powered by very good growth in its Azure public cloud business and overall bullish outlook for the year. Meta Platforms was the biggest gainer in the S&P, soaring more than 5% after reporting an impressive earnings beat. They reported $6.43 a share and $42.31 billion in revenue, both beating analysts expectations.
The broader market mirrored this optimism, with the S&P 500 bouncing back from mid-day declines. The index quickly fell into bear market territory, falling more than 20% from its February peak. As the session went on, it pushed back and reclaimed much of those cuts. The Nasdaq Composite followed suit, climbing 0.9% in after-hours trading.
Microsoft’s revelation of a major performance uptick across the board—particularly in its cloud segment—set off a Wall Street love affair with the stock. The software company not only blew past earnings expectations but in addition provided strong forward guidance. Analysts interpreted this as a strong signal of persistent growth momentum.
“While market volatility may persist until more tariff certainty emerges, we think the sharpest Trump policy swings are likely behind us and that the outlook is becoming more constructive.” – Solita Marcelli, UBS Global Wealth Management chief investment officer.
Meta’s quarterly results further fueled market optimism. The company increased its full-year capital expenditures forecast to $64 billion from $72 billion, emphasizing its commitment to expanding data centers crucial for artificial intelligence development. This shrewd investment has given investors the confidence they needed to believe in Meta’s long-term growth potential.
Amazon’s stock price jumped more than 2% in afterhours trading following the announcement of its $4 billion investment. This cash will go toward expanding its last-mile delivery network to smaller towns in all 50 states. It’s widely assumed that this move will make logistics more efficient and sharpen Amazon’s competitive edge in the rapidly-growing e-commerce space.
Tesla’s stock went down more than 3% in overnight trading on Robinhood. After news broke that Tesla’s board is looking for a new chief executive to succeed Elon Musk, Tesla’s stock went into free-fall. This turn of events added to worries about the company’s leadership turmoil at the fledgling electric vehicle maker.
Perhaps the biggest focus, on Thursday morning, will be on the quarterly results for investors. Others as diverse as CVS Health, Eli Lilly, and McDonald’s are scheduled to report their earnings. Supplementing that ballyhoo will be a second round in the afternoon when Apple and Amazon release their quarterly results.
The Dow Jones Industrial Average was showing modest gains in futures trading, up 138 points, or 0.3%. Both the S&P 500 and Dow rose sharply after tumbling recently.
Economists are chiming in about how important these political developments can be to influencing market dynamics. Finally, chief markets economist John Higgins at Capital Economics stressed a key distinction. He argues that the future path of U.S. markets will be determined by whether they can steer past the policy landmines that await in President Trump’s administration.
“How things pan out over the next hundred days in the U.S. and elsewhere will partly hinge on whether U.S. markets (Treasuries in particular) and Corporate America continue to act as effective guardrails against Trump’s policies, as they appear to have done since April 2.” – John Higgins.
Analysts are hopeful for better days ahead. As such, they think that once President Trump’s administration goes from tariffs and trade to a fiscal policy U.S. equities and dollar could strengthen.
“If that is the case, it’s conceivable that U.S. equities and even the dollar will recover ground as his administration’s focus shifts from tariffs and trade to fiscal policy.” – John Higgins.