By Lawrence Delevingne and Amanda Cooper
BOSTON/LONDON (Reuters) -Wall Street shares advanced on Thursday as investors cheered updates from Meta and Tesla , while gold hit a record and the U.S. dollar advanced on potential tariffs.
The Federal Reserve held rates steady on Wednesday, in line with expectations, with Fed Chair Jerome Powell saying there would be no rush to cut them again.
U.S. stocks ended higher on Thursday as investors digested a stack of key earnings reports. The Dow Jones Industrial Average was up about 0.4%, the S&P 500 rose about 0.5%, and the Nasdaq Composite added about 0.25%.
Microsoft beat quarterly revenue estimates, but a downbeat outlook for its cloud computing business pushed its shares down 6%, while Meta forecast first-quarter revenue below market estimates, but pledged to cut costs, lifting its shares by 1.5%.
Tesla shares gained nearly 3% after the carmaker said it was on track to roll out new, cheaper electric vehicle models in the first half of 2025 and would start testing a paid autonomous car service in June, overshadowing poor quarterly results.
Apple, reporting after the close of U.S. markets, announced quarterly profits above estimates but with a drop in China sales, leading to choppy trading in the extended session.
Technology stocks stumbled badly on Monday as investors factored in implications from the low-cost Chinese AI model, with shares of high-profile tech names such as Nvidia <NVDA.O>, Broadcom <AVGO.O> and Oracle <ORCL.O> getting pummelled.
“The new approach to AI likely does not jeopardize the bull market, as broader market participation and Fed rate cuts are likely to act as tailwinds,” Jeff Buchbinder, chief equity strategist for LPL Financial, said in a note on Thursday.
SLOWER U.S. GROWTH, TARIFF THREAT
Data earlier on Thursday showed U.S. economic growth slowed in the fourth quarter, but remained robust enough for investors to expect the Fed to lower rates only gradually this year. Gross domestic product increased at a 2.3% annualised rate last quarter, below estimates in a Reuters poll for a rise of 2.6%, after accelerating at a 3.1% pace in the July-September quarter, the Commerce Department’s Bureau of Economic Analysis said in its advance GDP estimate on Thursday.
“The U.S. consumer has been unstoppable, supported by wealth creation, a strong labor market, and lending,” Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, said in an email. “Still, inflation is still a bit too high for the Fed’s liking and the bar to a March rate cut is rising.”
U.S. Treasury yields fell on Thursday in line with declining European government bond yields. The yield on benchmark U.S. 10-year notes dropped 3.9 basis points to 4.516%.
President Donald Trump’s policies remain a risk for the Fed’s policy outlook, and Saturday is likely to see new tariffs slapped on Canada, Mexico and possibly China. The Mexican peso and Canadian dollar both weakened about 0.5% versus the dollar late on Thursday following related comments from Trump.
The European Central Bank cut interest rates as expected on Thursday and reiterated that euro zone inflation is increasingly under control despite concerns about global trade.
On European markets, the STOXX 600 index hit a new record high, rising 0.86%, in a heavy earnings day that included results from Deutsche Bank, energy producer Shell and retailer H&M.
The euro and sterling were flat on the day at $1.04 and $1.24, respectively.
The yen, however, strengthened about 0.65% to 154.25 per dollar with Bank of Japan Deputy Governor Ryozo Himino saying in a speech that the central bank will continue to raise interest rates if the economy and prices move in line with its forecasts.
In commodities, gold rose about 1.3% to $2,792 an ounce to hit record levels, taking advantage of the drop in the dollar. Gold prices have risen sharply this week, partly driven by nervousness over Trump’s tariff plans and the possibility – albeit distant – of him imposing duties on precious metals imports.
Oil prices edged up on Thursday, held in check by threatened U.S. tariffs on Canadian and Mexican crude imports that could take effect this weekend. Brent crude futures <LCOc1> settled 29 cents, or 0.4%, higher at $76.87 a barrel. U.S. crude futures <CLc1> finished at $72.73 a barrel, up 11 cents, or 0.2% higher than Wednesday, when they settled at their lowest level this year so far. [O/R]
(Reporting by Lawrence Delevingne in Boston and Amanda Cooper in London. Additional reporting by Anjana Anil in Bengaluru. Editing by Emelia Sithole-Matarise, Jane Merriman,Lisa Shumaker and Diane Craft)
