The rally shows that investors are leaning heavily on earnings resilience to look past geopolitical turmoil, but that increases the risk of a quick tumble if companies begin to signal that war-driven costs were squeezing growth.
“I think there’s this big tug of war, but the earnings side is winning so far,” said Angelo Kourkafas, senior global investment strategist at Edward Jones.
“Market is trying to look through that near-term uncertainty, but of course, the longer it lasts, the more acute the pressures are.”
At 10.14 am ET on Thursday, the Dow Jones Industrial Average rose 429.39 points, or 0.88%, to 49,233.73, the S&P 500 was flat at 7,138.78 and the Nasdaq Composite dropped 77.65 points, or 0.31%, to 24,595.59.
However, the S&P 500 was headed for its biggest monthly gain since November 2020, the Nasdaq was on pace for its best month since April 2020 and the blue-chip Dow cruised toward its strongest month since November 2024.
Data released on Thursday showed that US economic growth picked up in the first quarter on a rebound in government spending, but the increase is likely temporary as the war with Iran drives up gasoline prices and squeezes household budgets.
Big Tech earnings were largely strong, with shares of Google parent Alphabet rising 6.1% to hit a record high following a record quarter for its cloud unit.
However, Meta Platforms and Microsoft fell 8.4% and 4.8%, respectively, a day after they laid out their capital spending plans, while Amazon dipped 2.1% following results, despite exceeding cloud sales expectations.
Seven of the main S&P 500 sectors were in the green, with the S&P 500 utilities sector leading gains with 1.6% rise.
Investors were also assessing commentary from Federal Reserve Chair Jerome Powell on Wednesday. The central bank voted to keep interest rates unchanged, but three officials signaled that inflation was too high to signal a bias toward rate cuts.
Brent crude futures hit their highest in nearly four years on fears of a protracted disruption in oil markets, after an Axios report said President Donald Trump was slated to receive a briefing from the leader of the US Central Command on new plans for potential military action against Iran.
“There also appears to be an increased urgency from the Trump administration to bring things to a head,” said David Morrison, senior market analyst at Trade Nation.
Oil prices retreated from their peaks, but remain elevated, around US$110 a barrel.
The Axios report undermined weeks of optimism that diplomatic efforts to resolve the US-Iran war would stay on track despite setbacks.
Among other stocks, Eli Lilly gained 7% after the drugmaker lifted its annual profit forecast on sustained weight-loss drug demand.
Caterpillar shares rose 8.4% to reach a record high after the construction and mining equipment maker reported higher first-quarter profit.
Advancing issues outnumbered decliners by a 2.14-to-1 ratio on the NYSE and by a 1.6-to-1 ratio on the Nasdaq.
The S&P 500 posted 20 new 52-week highs and 13 new lows, while the Nasdaq Composite recorded 54 new highs and 71 new lows.