Wall Street saw modest gains on Thursday as investors celebrated strong earnings from Nvidia while remaining cautious amid ongoing trade policy uncertainty. The S&P 500 and Nasdaq Composite both climbed approximately 0.4%, while the Dow Jones Industrial Average inched up by 0.3%. Technology stocks played a leading role in the rally, with Nvidia at the forefront thanks to its impressive quarterly results.
Nvidia’s first-quarter report exceeded expectations, with earnings per share of $0.96 and revenue of $44.06 billion. This performance was largely fueled by a 73% year-over-year increase in data center sales, a sign of booming demand for AI-related services. The company’s stock surged 5% in after-hours trading. Analysts noted that $140 would be a critical breakout level to watch, indicating possible continued upside.
Investors were also encouraged by the strong May performance of the tech sector overall. The information technology segment of the S&P 500 was on track for its best month since November 2023, up nearly 11%. Super Micro Computer and Seagate Technology were among the top performers, each gaining over 29% this month.
E.l.f. Beauty also stole the spotlight with a 24% surge, its biggest one-day gain ever, after announcing its acquisition of Hailey Bieber’s Rhode beauty brand and posting solid earnings.
But gains were capped as political and economic uncertainties lingered. Most notably, President Donald Trump’s controversial "reciprocal tariffs" suffered a legal setback. A federal trade court ruled that Trump overstepped his authority with the new tariffs, blocking many of them from taking effect. Although markets had partially priced in the legal risk, the decision added to the general sense of unease.
Federal Reserve Chairman Jerome Powell met with Trump and reiterated that monetary policy decisions would continue to be made independently, based solely on economic data. Powell did not comment on future rate decisions but emphasized that the Fed remains data-driven.
Despite the Fed’s effort to reassure markets, Thursday’s economic data painted a mixed picture. Initial jobless claims climbed to 240,000, higher than expected. Additionally, first-quarter GDP was revised slightly downward, now estimated to have contracted by 0.2%. A notable portion of the decline came from a surge in imports, as companies rushed to stockpile goods ahead of potential tariffs.
Corporate earnings offered both optimism and caution. Salesforce dropped 6% despite beating earnings estimates, as investors worried about its acquisition strategy. Meanwhile, Best Buy cut its full-year guidance due to the expected negative impact of tariffs, even though it narrowly beat quarterly profit expectations.
In the broader geopolitical context, Asia-Pacific markets responded positively to the tariff court decision. South Korea’s KOSPI and Japan’s Nikkei both rose nearly 2%. However, currency markets reflected volatility, with the U.S. dollar strengthening slightly after the ruling.
Looking forward, analysts said that while some political risks had eased, volatility would likely remain high. Goldman Sachs noted that Trump could still use alternative legal avenues, such as Section 301 or 122, to implement similar tariffs. This lingering uncertainty is likely to keep traders on edge.
As May draws to a close, many are watching closely to see if the strong performance of U.S. equities can continue. Historically, a strong May has been a bullish signal for the following year, with average gains of 20% when the S&P 500 rises over 5% in the month.
