U.S. stocks higher at close of trade; Dow Jones Industrial Average up 0.38%

Investing.com – The S&P 500 closed higher Thursday, but gains were kept in check by weakness in Microsoft following quarterly results that pointed to softer cloud growth.

At 4:00 p.m. ET (21:00 GMT), the S&P 500 index rose 0.5%, the NASDAQ Composite rose 0.3%, and the Dow Jones Industrial Average rose 168 points, or 0.4%,

Markets assess ‘Magnificent Seven’ earnings; dip buying helps Nvidia cut losses

On the corporate front, investors assessed a raft of earnings from mega-cap tech companies, including Microsoft and Meta Platforms, in the wake of the emergence of a cut-price Chinese AI model earlier this week.

Microsoft (NASDAQ:MSFT) shares fell 6% despite reporting quarterly results that beat estimates, as its cloud revenue and AI spending disappointed. But tech bull Wedbush said that the "AI piece of the MSFT story was robust and ahead of Street estimates as $13 billion AI ARR was $1 billion above our estimate." This speaks to the "massive momentum Redmond is seeing in the field as more enterprises head down this path," it added.

Meta (NASDAQ:META) gained more than 1% on better-than-estimated fourth-quarter revenue, although it flagged that current-quarter sales may not meet expectations.

Tesla (NASDAQ:TSLA) shares rose nearly 3% after the electric vehicle giant noted that it was driving to slash costs and roll out a cheaper EV model.

The focus will now be on Apple's (NASDAQ:AAPL) first-quarter earnings report, scheduled for release late Thursday.

Elsewhere on tech earnings front, International Business Machines (NYSE:IBM) jumped nearly 13% hitting an all time high intraday after its Q4 results topped estimates, driven by a surging demand for AI.

Beyond tech earnings, meanwhile, NVIDIA Corporation (NASDAQ:NVDA) cut its intraday losses to end the day around the flatline.

Trump warns of tariffs on goods from Mexico, Canada

President Donald Trump said the U.S. would put a 25% tariff on imports from Mexico and Canada.

Caterpillar stumbles, UPS slumps after disappointing on earnings stage

Caterpillar Inc (NYSE:CAT) fell more than 4% after construction equipment maker reported fourth-quarter revenue that fell short of estimates and forecast lower sales for 2025 owing to shrinking dealer inventories.

United Parcel Service Inc (NYSE:UPS), meanwhile, fell 14% after the courier company reported soft revenue guidance for 2025 and announced that it would slash deliveries for Amazon (NASDAQ:AMZN) by more than 50%. UPS guided revenue of $89B for 2025, down from $91.1B seen in 2024 and missing consensus of $94.9B.

GDP growth eases in Q4, but still strong enough for Fed to maintain wait and see

The US economy grew by 2.3% in the fourth quarter, easing at an annualized rate from a pace of 3.1% in the July-September quarter, according to advance data from the Commerce Department on Thursday.

Economists had expected the reading to decelerate to 2.7%.

"For the Fed, the progress in inflation progress looks no different from how it did. The 4Q surge in consumption is, at the margin, a reminder that the labor market and household incomes remain strong, unthreatened, which allow them patience," Morgan Stanley said in a recent note.

The Federal Reserve chose to leave interest rates unchanged on Wednesday at a range of 4.25% to 4.5%, citing in part solid economic indicators.

Policymakers emphasized their commitment to maintaining restrictive monetary policy until they gain more confidence that inflation is sustainably moving toward the Fed’s 2% target.

They also said it was still early to gauge President Trump’s policies and their impact on the central bank, reflecting uncertainties surrounding Trump's proposed tariffs and fiscal measures

(Peter Nurse, Ayushman Ojha contributed to this article.)