US equity indexes rose in a broad-based rally as the impact of artificial intelligence showed in corporate earnings, and a preliminary Q1 economic growth estimate helped investors put ongoing geopolitical tensions on the back burner.
The Dow Jones Industrial Average surged 1.6% to 49,652.14, with the S&P 500 up 1% to 7,209.01 and the Nasdaq Composite higher by 0.9% to 24,892.31 on Thursday. Communication services, industrials, and utilities led the gainers, while technology emerged as the sole decliner.
Alphabet (GOOG, GOOGL) shares jumped 10%, among the leaders on the Nasdaq, after the company late Wednesday reported Q1 earnings and revenue above market expectations. Qualcomm's (QCOM) shares soared 15%, among the top performers on the S&P 500 and the Nasdaq, after the firm posted better-than-expected fiscal Q2 adjusted earnings and sales. Caterpillar (CAT) raised its full-year sales growth outlook as Q1 results exceeded consensus. Its shares soared 9.9%, the Dow's leader.
Meta Platforms' (META) shares sank 8.6%, among the worst performers on the S&P 500 and the Nasdaq, after the company overnight raised its forecast for 2026 capital expenditures, overshadowing its Q1 earnings and revenue beat.
Microsoft (MSFT) said Wednesday that it expects capital expenditures of $190 billion for the 2026 calendar year, including roughly $25 billion from higher component pricing. Shares were down 3.9%, among the steepest decliners on the Nasdaq and the Dow.
In economic news, gross domestic product rose by 2.0% annualized in Q1 following a 0.5% gain in Q4, according to an advance estimate of economic growth, slower than the 2.3% increase expected in a survey compiled by Bloomberg.
Non-residential investment was "very strong overall, driven by investment in information processing equipment, software, and R&D, overwhelming declines in both residential and non-residential structures," Thomas Simons, Jefferies Chief US Economist, said in a note. "The impact of AI infrastructure investment is clearly evident in the data, driving growth beyond the strength of the consumer."
The personal consumption expenditures price index increased by 0.7% in March, as expected, lifting the year-over-year rate to 3.5% from 2.8%. The price index increased by 0.4% month-over-month in February. The core PCE price index increased by 0.3%, as forecast, following a 0.4% gain in February. The year-over-year rate accelerated to 3.2%, in line with expectations, from 3.0% in the previous month.
Initial jobless claims fell to 189,000 in the week ended April 25 from an upwardly revised 215,000 in the previous week, compared with expectations for an increase to 212,000 in a survey of analysts compiled by Bloomberg. The four-week moving average declined by 3,500 to 207,500.
In geopolitics, US President Donald Trump will hear about updated military options for Iran from Pentagon officials on Thursday, as a possible way of forcing Tehran into an agreement, CNN reported. Trump's current strategy is to inflict economic pain on Iran.
Iran's new supreme leader gave a rare statement Thursday, vowing not to give up the country's nuclear or missile technologies and signaling Tehran would keep control of the Strait of Hormuz, Bloomberg reported. Iran will "guard" its "advanced technologies" like it does its own borders, Mojtaba Khamenei was cited as saying in a written statement. It will "secure the Persian Gulf region and dismantle the hostile enemy's exploitation of this waterway," he added, referring to the strait.
Nevertheless, West Texas Intermediate crude oil futures fell 1.4% to $105.41, and Brent crude futures dropped 3.4% to $114.01.
Most US Treasury yields declined, with the 10-year down 3.8 basis points to 4.38%, and the two-year slumped 5.9 basis points to 3.87%.
In precious metals, gold futures climbed 1.5% to $4,629.3, and silver futures jumped 3.1% to $73.81.