The S&P 500 (^GSPC +1.02%) rose 1.02% to 7,209.00, the Nasdaq Composite (^IXIC +0.89%) added 0.89% to 24,892.31, and the Dow Jones Industrial Average (^DJI +1.62%) jumped 1.62% to 49,652.15 as cyclicals outpaced a mixed tech tape.
Market movers
Alphabet rallied about 10% on a blockbuster earnings beat and upbeat AI commentary, while Microsoft and Meta Platforms slid 4% and 9%, respectively, on concerns over soaring AI capex. Dow component Caterpillar surged about 10% following robust results.
What this means for investors
Despite mixed earnings results from the mega-cap tech names today, U.S. indexes moved higher. This is primarily thanks to Alphabet for the S&P 500 and the Nasdaq, and Caterpillar for the Dow.
Alphabet accounts for over 5% of the S&P 500’s portfolio and nearly 7% of Nasdaq’s, so its 10% spike today after excellent earnings helped propel the indexes. While Alphabet is making a massive bet on AI, planning to spend roughly $185 billion in capex, its Google Cloud revenue soared by a staggering 62%.
Meanwhile, Microsoft and Meta also announced they’d be spending around $190 billion and $135 billion on capex, but analysts questioned the ROI the companies would see from their heavy spending. This divergence in market reactions between Alphabet and its peers is fascinating, as just two years ago, many considered Alphabet an AI laggard, with Google acting like a headwind to the stock.
Lastly, Caterpillar reported excellent earnings and also benefited from the AI and data center boom. Accounting for nearly 10% of the Dow’s portfolio, CAT’s 10% jump today almost single-handedly powered the index’s 1.6% rise.
As I write this, Apple is reporting earnings and is currently down 1% after hours, despite beating Wall Street’s expectations. The market’s reaction to the $4 trillion stock’s earnings could set the tone for the market tomorrow.
Josh Kohn-Lindquist has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Apple, Caterpillar, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy.