Wall Street closed with a mixed sentiment as investors braced for earnings from major tech players, the “Mag7.” The S&P 500 dipped slightly, while the Nasdaq saw a modest gain, and the Dow Jones fell nearly 0.6%. Options markets indicated significant post-earnings volatility, with expectations of around $1 trillion in market cap swings for Alphabet, Microsoft, and Meta, driven by AI and cloud performance.

Alphabet and Microsoft reported strong earnings, bolstered by AI and cloud growth, with Alphabet generating $109.9 billion in revenue. Microsoft reassured investors about its Azure growth and overall profitability. In contrast, Amazon’s solid results were overshadowed by cautious guidance and rising costs, while Meta’s earnings beat expectations but raised concerns over AI scaling costs. The Fed maintained interest rates, indicating a cautious approach, while geopolitical tensions pushed Brent crude oil above $110 per barrel.

The key takeaway for market professionals is the divergence in tech earnings; while AI and cloud investments are paying off for some, rising costs and cautious outlooks are tempering enthusiasm, suggesting a selective approach to tech stocks may be warranted.

Source: xtb.com