The S&P 500 (^GSPC) is off to the races this morning, up 0.50% thanks to tailwinds from mega-cap earnings beats and a sharp pullback in oil prices, even as the Fed’s preferred inflation gauge ran hotter than expected. The broader markets are seeing the glass half full, pushing the S&P 500 (^GSPC) to a gain of 8.5% for the month if today’s performance holds.
A key Fed inflation gauge climbed 0.7% in March, the sharpest monthly jump in years, pushing the annual rate to 3.5% as gas prices drove costs further from the Fed’s 2% target. Q1 GDP came in at 2%, missing the 2.2% estimate but better than originally thought. Lower oil eases the inflation glide path the Fed needs to keep rate-cut optionality alive. The FOMC held the funds rate at 3.5% to 3.75% Wednesday, but the 8-4 dissent was the widest split since October 1992. The 10-year Treasury yield is anchored near 4.4%, giving equity multiples room to breathe.
Big Tech earnings reshuffle the leaderboard
Four of the Magnificent Seven reported after Wednesday’s close, and Wall Street is responding today with a series of moves.
Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) beat estimates with Q1 EPS of $5.11 versus $2.63 expected and Google Cloud revenue up 63%, with backlog nearly doubling to $460 billion. Shares rose to about $375 after hours.
Amazon (NASDAQ:AMZN) delivered AWS growth of 28%, the fastest in 15 quarters, sending shares up roughly 3% before the bell.
Microsoft (NASDAQ:MSFT) beat on EPS and reported its AI business at a $37 billion annual run rate, up 123% year-over-year, but shares slipped about 2% on softer revenue guidance.
Meta Platforms (NASDAQ:META) was the laggard, down 9% pre-market after raising 2026 capex guidance to $125 to $145 billion, posting a $4.03 billion Reality Labs operating loss, and confirming a long-dated investment-grade debt sale.
In response: . Morgan Stanley held Overweight on Microsoft, Bank of America reiterated Buy on Amazon with a price target raise to $310, and JPMorgan lifted its Alphabet target to $460 while maintaining Overweight. Meta drew the most attention. JPMorgan downgraded the stock to Neutral from Overweight, though Wells Fargo held its Overweight and kept the faith. Bank of America reiterated Buy on Nvidia with a $300 target, and Oppenheimer initiated Palantir at Outperform with a $200 price target.
Pharma and industrials broaden the rally
Eli Lilly (NYSE:LLY) reported 56% revenue growth to $19.8 billion, with Mounjaro up 125% and Zepbound up 80%; full-year sales guidance was lifted by $2 billion. Merck (NYSE:MRK) topped estimates on Keytruda strength and narrowed its sales range to $65.8 to $67.0 billion, though a $9 billion Cidara charge drove a GAAP loss.
Separately, Caterpillar (NYSE:CAT) climbed 5% pre-market on 22% revenue growth, with Power Generation sales up 41% on data center demand. The company also trimmed its full-year tariff hit projection to $2.2 to $2.4 billion.
Oil reversal collides with hot inflation
Brent crude reversed lower after touching a four-year high near $138 on April 7, easing back to $110 to $114 range as Iran risk premium cools. WTI sits around $100, well off its $114.58 peak. The relief comes against a hot March PCE report: headline inflation rose to 3.5% year-over-year, the highest since August 2023, with core PCE at 3.2%, fueled by an 11.6% monthly jump in energy.
What to watch from here
The VIX sits near 17.8, well below the 31 reading from late March, suggesting markets are absorbing the inflation surprise without panic hedging. The 10-year Treasury at 4.4% remains the swing factor against rich tech multiples. Watch Apple’s report tonight and any fresh Iran headlines that could push oil back up.
What To Watch Next
Apple (NASDAQ:AAPL) reports after the close, the last Magnificent 7 print of the cycle and the swing factor for whether this rally extends or stalls. Watch the iPhone services line and any commentary on China demand, then track WTI for confirmation that the Iran risk premium keeps deflating
Top Gaining Stocks
Top Losing Stocks