AI Investments Drive Tech Giants' Gains as S&P 500 and Nasdaq Hit Record Highs

S&P 500 and Nasdaq hit records, lifted by Alphabet

July 24 (Reuters) - The S&P 500 and the Nasdaq hit record highs on Thursday as robust results from Google parent Alphabet fueled optimism about other heavyweight AI stocks, but Tesla slumped after the electric vehicle maker's results disappointed investors. Alphabet (GOOGL.O), opens new tab rose 1.6% as the Google parent's results boosted confidence that heavy investment in a race to dominate AI technology is paying off. Shares of Microsoft (MSFT.O), opens new tab, Nvidia (NVDA.O), opens new tab and Amazon (AMZN.O), opens new tab climbed over 1%. The U.S.-Japan trade deal and recent signs of progress in talks with the European Union also fueled Wall Street's gains. "Investors are feeling optimistic about trade negotiations, about the economy, the trend in inflation, as well as the better-than-expected Q2 earnings reports," said Sam Stovall, chief investment strategist at CFRA Research. Tesla (TSLA.O), opens new tab tumbled almost 9% after CEO Elon Musk warned of a "few rough quarters" as the U.S. government cuts support for electric vehicle makers. The stock has fallen about 25% so far in 2025. UnitedHealth lost 3.7% after the insurer revealed it was cooperating with a Department of Justice probe into its Medicare practices, following reports of both criminal and civil investigations. IBM dropped 8% after its second-quarter results fell flat with investors, hampered by disappointing sales in its core software division. Honeywell fell 4.6% despite topping Wall Street's expectations and raising its annual outlook. The S&P 500 was up 0.32% at 6,379.21 points. The Nasdaq gained 0.41% to 21,106.64 points, while the Dow Jones Industrial Average was down 0.34% at 44,855.18 points, and it remained near its December 4 record high. Seven of the 11 S&P 500 sector indexes rose, led by information technology (.SPLRCT), opens new tab, up 0.87%, followed by a 0.86% gain in communication services (.SPLRCL), opens new tab. American Airlines (AAL.O), opens new tab tumbled almost 8% after the carrier forecast a big third-quarter loss, hurt by sluggish domestic travel demand. U.S. President Donald Trump's global trade war has created the biggest uncertainty for the airline industry since the COVID-19 pandemic. Markets were also monitoring Trump's planned visit to the Federal Reserve's headquarters later in the day, which follows months of the president criticizing Fed Chair Jerome Powell for interest rates the president views as too high. With the Fed widely expected to hold rates steady at next week's meeting, traders see a 60% chance of a September rate cut, according to CME's FedWatch tool. A fresh Labor Department report showed jobless claims last week fell to 217,000 - well below estimates - signaling continued resilience in the U.S. job market. U.S. business activity gained momentum in July, but companies hiked prices on goods and services, fueling economists' predictions of faster inflation in the months ahead, largely driven by rising import tariffs. Declining stocks outnumbered rising ones within the S&P 500 (.AD.SPX), opens new tab by a 1.0-to-one ratio. The S&P 500 posted 44 new highs and 6 new lows; the Nasdaq recorded 72 new highs and 37 new lows. Reporting by Nikhil Sharma and Pranav Kashyap in Bengaluru, and by Noel Randewich in San Francisco; Editing by Maju Samuel and David Gregorio Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Stocks * Commercial Strategy * Health Insurance * Healthcare Providers * Employee Health Noel Randewich Thomson Reuters San Francisco correspondent covering the stock market with a focus on Big Tech, semiconductors and other Silicon Valley companies

S&P 500 and Nasdaq notch record closes, lifted by Alphabet

July 24 (Reuters) - The S&P 500 and the Nasdaq notched record high closes on Thursday as robust results from Google parent Alphabet fueled optimism about other heavyweight artificial intelligence stocks, while Tesla slumped after the electric vehicle maker's results disappointed investors. Alphabet (GOOGL.O), opens new tab rose as the search giant's results boosted confidence that heavy investment in a race to dominate AI technology is paying off. Shares of Microsoft (MSFT.O), opens new tab, Nvidia (NVDA.O), opens new tab and Amazon (AMZN.O), opens new tab also climbed. The U.S.-Japan trade deal and recent signs of progress in talks with the European Union also fueled Wall Street's gains. "Investors are feeling optimistic about trade negotiations, about the economy, the trend in inflation, as well as the better-than-expected Q2 earnings reports," said Sam Stovall, chief investment strategist at CFRA Research. Tesla (TSLA.O), opens new tab tumbled after CEO Elon Musk warned of a "few rough quarters" as the U.S. government cuts support for electric vehicle makers. The stock has fallen around 25% so far in 2025. UnitedHealth fell after the insurer revealed it was cooperating with a Department of Justice probe into its Medicare practices, following reports of both criminal and civil investigations. IBM dropped after its second-quarter results fell flat with investors, hampered by disappointing sales in its core software division. Honeywell fell despite topping Wall Street's expectations and raising its annual outlook. According to preliminary data, the S&P 500 (.SPX), opens new tab gained 5.53 points, or 0.08%, to end at 6,363.87 points, while the Nasdaq Composite (.IXIC), opens new tab gained 38.85 points, or 0.19%, to 21,057.96. The Dow Jones Industrial Average (.DJI), opens new tab fell 312.08 points, or 0.69%, to 44,698.21. American Airlines (AAL.O), opens new tab tumbled after the carrier forecast a big third-quarter loss, hurt by sluggish domestic travel demand. U.S. President Donald Trump's global trade war has created the biggest uncertainty for the airline industry since the COVID-19 pandemic. Markets were also monitoring Trump's planned visit to the Federal Reserve's headquarters on Thursday, following months of the president criticizing Fed Chair Jerome Powell for interest rates Trump views as too high. With the Fed widely expected to hold rates steady at next week's meeting, traders see a 60% chance of a September rate cut, according to CME's FedWatch tool. A U.S. Labor Department report showed jobless claims last week fell to 217,000 - well below estimates - signaling continued resilience in the job market. U.S. business activity gained momentum in July, but companies hiked prices on goods and services, fueling economists' predictions of faster inflation in the months ahead, largely driven by rising import tariffs. Reporting by Nikhil Sharma and Pranav Kashyap in Bengaluru, and by Noel Randewich in San Francisco; Editing by Maju Samuel and David Gregorio Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Stocks * Commercial Strategy * Health Insurance * Healthcare Providers * Employee Health Noel Randewich Thomson Reuters San Francisco correspondent covering the stock market with a focus on Big Tech, semiconductors and other Silicon Valley companies

Tesla tumbles and Alphabet rallies to keep Wall Street near its records

NEW YORK -- Wall Street is hanging near its records on Thursday, but the calm surface of the U.S. stock market is hiding some roiling moves underneath. Alphabet is rallying, and Tesla is sinking sharply following a jumble of profit reports from big U.S. companies. The S&P 500 was 0.1 per cent higher in early trading after setting an all-time high the day before. The Dow Jones Industrial Average was down 265 points, or 0.6 per cent, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.3 per cent higher. Alphabet climbed 3.1 per cent after the company behind Google and YouTube delivered a fatter profit for the latest quarter than analysts expected. It's leaning more into artificial-intelligence technology and said it's increasing its budget to spend on AI chips and other investments this year by US$10 billion to $85 billion. That helped drive up other stocks in the AI industry, including a 1.4 per cent gain for chip company Broadcom. But a 9.2 per cent drop for Tesla helped keep the market in check. Elon Musk's electric-vehicle company reported results for the spring that were roughly in line with or above analysts' expectations, and Musk is trying to highlight Tesla's moves into AI and robotaxis. The focus, though, remains on how Musk's foray into politics is turning off potential customers, and he said several rough quarters may be ahead as "we're in this weird transition period where we'll lose a lot of incentives in the U.S." Stocks have broadly been rallying for weeks on hopes that U.S. President Donald Trump will reach trade deals with other countries that will lower his stiff proposed tariffs, along with the risk that they could cause a recession and drive up inflation. The record-setting gains have been so strong that criticism is rising about how expensive stock prices have become. That in turn puts pressure on companies to deliver solid profit growth in order to justify their big gains. Besides Tesla, airlines also helped weigh on the market following their profit reports. American Airlines lost 9.3 per cent despite reporting a stronger profit than expected, thanks in part to premium bookings on long-haul flights abroad. The company said it expects to report a loss for the summer quarter. It also gave a forecast for results for the full year that had a wide range: between a loss of 20 cents per share and a profit of 80 cents per share, depending on how the economy performs. Southwest Airlines lost 8.9 per cent after delivering weaker results than expected. But it also said that it's seeing early signs of stronger demand coming off a "depressed second quarter." Reactions in the stock market have generally been stronger than usual when companies beat or miss their profit targets by a wide margin, according to Julian Emanuel at Evercore. Other extreme moves have also been happening underneath the market's surface, including huge swings for "meme stocks." Those are stocks where traders are looking to jump in with others driven by online cheerleading and get out before the momentum stops. Such swings, though, haven't been showing up in overall market indexes, which have been gliding recently. The S&P 500 hasn't had a day where it swung by at least one per cent in a month. In the bond market, U.S. Treasury yields rose following the latest signal that the U.S. economy seems to be holding up OK despite all the pressures on it from tariffs and elsewhere. A report said that fewer U.S. workers applied for unemployment benefits last week, a potential signal of easing layoffs. That helped nearly cement expectations on Wall Street that the U.S. Federal Reserve will hold interest rates steady at its next meeting next week, even though Trump has been agitating angrily for cuts. The European Central Bank. which had been cutting its rates, also held steady on Thursday as it waits to see how Trump's tariffs will affect the economy. The yield on the 10-year U.S. Treasury note rose to 4.43 per cent from 4.40 per cent late Wednesday. In stock markets abroad, indexes rose across much of Asia and Europe. Tokyo's jump of 1.6 per cent and London's rise of 0.8 per cent were two of the bigger gains.