Dow surges 790 points to record close as Caterpillar and Alphabet earnings lift markets

Key facts

• Dow Jones Industrial Average rose 790.33 points, or 1.62%, to 49,652.14.
• S&P 500 gained 1.02% to close at 7,209.01, its first close above 7,200.
• Nasdaq Composite added 0.89% to 24,892.31, a new record.
• Caterpillar shares jumped nearly 10% after better-than-expected quarterly results and an upgraded annual revenue outlook.
• Alphabet shares gained 10% after first-quarter revenue beat expectations; it raised 2026 capex guidance to as much as $190 billion.
• Meta and Microsoft fell 8.6% and 3.9%, respectively, on capex and user growth concerns.
• S&P 500 gained 10.4% in April, its best month since November 2020; Nasdaq rose 15.3%, best since April 2020.
• Brent crude fell 3.41% to $114.01 a barrel; WTI dropped 1.69% to $105.07.

Wall Street rallies on strong earnings from Caterpillar and Alphabet

Stocks surged on Thursday, propelling the Dow Jones Industrial Average to a record close above 49,600 and the S&P 500 above 7,200 for the first time, as investors cheered robust quarterly results from industrial bellwether Caterpillar and tech giant Alphabet. The broad market index rose 1.02% to 7,209.01, while the tech-heavy Nasdaq Composite added 0.89% to 24,892.31, both setting new closing highs. The blue-chip Dow gained 790.33 points, or 1.62%, to settle at 49,652.14. The rally marked a sharp reversal from earlier worries about a potential escalation between the U.S. and Iran, which had pushed oil prices higher earlier in the week. On Thursday, however, crude prices retreated after reports that President Donald Trump had instructed aides to prepare for an extended blockade of Iran. Brent crude futures lost 3.41% to close at $114.01 a barrel, while West Texas Intermediate fell 1.69% to $105.07.

Caterpillar and Alphabet lead gains; Meta and Microsoft stumble

Caterpillar shares popped nearly 10% after the company reported better-than-expected quarterly figures and raised its annual revenue outlook. The industrial giant, viewed as a bellwether for the global economy, provided a glimmer of hope for the U.S. economy, which grew at a disappointing 2% annualized pace in the first quarter, below the 2.2% estimate but up from 0.5% in the prior quarter. Alphabet shares gained 10% after its first-quarter revenue beat expectations. The company also increased its 2026 capital expenditure guidance range to as much as $190 billion, signaling continued heavy investment in artificial intelligence infrastructure. In contrast, Meta and Microsoft lost 8.6% and 3.9%, respectively, as investors reacted negatively to their own capex plans and, in Meta's case, disappointing user growth.

Investor concerns linger over AI spending and valuations

Despite the upbeat earnings from some tech giants, the divergent performance of Meta and Microsoft underscored lingering unease about the massive capital expenditures tied to artificial intelligence. Tom Graff, chief investment officer at Facet, noted that while hyperscalers' spending on physical infrastructure is positive for GDP, questions remain about whether those investments will eventually yield software-like margins. "Something that we're going to keep wrestling with until we know one way or the other is: Does this AI spend at some point turn into software-like margins, or does it not really and we need to rethink those multiples," Graff said. The market's mixed reaction to the so-called "Magnificent Seven" earnings suggests that investors are still trying to assess the long-term payoff of AI investments. While Alphabet and Caterpillar provided a boost, the declines in Meta and Microsoft highlight the risks of high spending without clear returns.

April delivers best monthly gains since 2020 for major indexes

The strong finish to April capped a remarkable month for equities. The S&P 500 gained 10.4% in April, its best monthly performance since November 2020. The Nasdaq Composite surged 15.3%, its largest monthly increase since April 2020. The Dow ended April with a 7.1% advance, its strongest monthly performance since November 2024. The rally was fueled by a combination of robust corporate earnings, easing geopolitical fears, and renewed investor confidence in the technology sector. The S&P 500 and Nasdaq are now on pace to wrap up their best months in more than half a decade, underscoring the market's resilience despite headwinds from inflation and geopolitical tensions.

Oil prices reverse course amid reports of Iran blockade preparations

Oil prices fell sharply on Thursday, reversing gains from earlier in the week, after President Trump had told his aides to prepare for an extended blockade of Iran. Brent crude futures lost 3.41% to close at $114.01 a barrel, while West Texas Intermediate futures fell 1.69% to $105.07. The decline came as traders weighed the potential impact of a blockade on global oil supplies, with some analysts suggesting that the move could tighten markets further. added a new dimension to the ongoing tensions between the U.S. and Iran, which had previously driven crude prices higher on Wednesday. The market's reaction suggests that investors are still uncertain about the ultimate outcome of the standoff, but the immediate response was to take profits after recent gains.

Outlook: Markets eye Fed policy and earnings season continuation

As the earnings season continues, investors will be watching for further signals from corporate America about the health of the economy and the trajectory of AI-related spending. The strong April performance has set a high bar for the remainder of the year, but concerns about valuations and the sustainability of tech-driven gains persist. The Commerce Department's GDP report, which showed slower-than-expected growth, also raises questions about whether the Federal Reserve will maintain its current policy stance. With inflation still above target, the central bank faces a delicate balancing act. The market's ability to shrug off geopolitical risks and disappointing economic data in April suggests a resilient investor base, but the path ahead remains uncertain.

The bottom line

• The Dow, S&P 500, and Nasdaq all closed at record highs on Thursday, driven by strong earnings from Caterpillar and Alphabet.
• Caterpillar's better-than-expected results and upgraded outlook provided a positive signal for the global economy.
• Alphabet's revenue beat and increased capex guidance underscored continued investment in AI, while Meta and Microsoft fell on capex and user growth concerns.
• April was the best month for the S&P 500 since November 2020 and for the Nasdaq since April 2020.
• the U.S. is preparing for an extended blockade of Iran, reversing earlier gains.
• Investor uncertainty persists over whether massive AI spending will translate into sustainable profit margins.