Today’s Market Recap: Fed Dissent and AI Capex Surges Define Volatile Earnings Week

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TradingKey - The S&P 500 edged down 0.04% to 7,135.95, while the Nasdaq Composite gained a modest 0.04% to reach 24,673.24. Meanwhile, the Dow Jones Industrial Average declined 0.57% to 48,861.81 as market participants adopted a cautious stance ahead of the Federal Reserve's interest rate decision and high-profile megacap technology earnings scheduled for after the close.

The peak of earnings season has arrived, delivering several unexpected results. Shares of Spotify (SPOT), Robinhood (HOOD), and SoFi (SOFI) all retreated following reports that failed to meet Wall Street's high expectations, despite the firms maintaining strong fundamental operations. Additionally, market focus turned to Bloom Energy’s (BE) recent rally, raising questions about whether the AI-driven energy sector is becoming overextended.

Plug Power (PLUG), a developer of hydrogen fuel cell and electrolyzer technology, finished Wednesday’s session at $3.41, a gain of 12.54%. The stock’s upward momentum was fueled by an increased analyst price target and a broader rally across the fuel cell industry. Investors are now looking toward the May 11 earnings report for critical updates on the company's margin improvements and cash-burn reduction.

Advanced Micro Devices (AMD), the specialized designer of CPUs, GPUs, and FPGAs, closed Wednesday at $337.11, rising 4.30%. The shares climbed during regular trading hours as a series of analyst upgrades and robust demand for AI semiconductors bolstered confidence ahead of the Q1 earnings announcement on May 5. Market focus remains on forthcoming guidance regarding data center expansion and AI GPU growth.

KalVista Pharmaceuticals (KALV), a biotech firm focused on oral treatments for rare diseases, surged 38.62% to close at $26.67. The jump followed the announcement that Italy-based Chiesi Group has agreed to acquire KalVista in an all-cash deal valued at $27 per share. While investors monitor regulatory approvals and closing risks, trading activity skyrocketed to 69.4 million shares — roughly 3,323% above the three-month average. Despite the acquisition premium, KalVista has declined 66% since its 2015 initial public offering.

Market Headline

Jerome Powell’s "farewell meeting" saw the greatest internal division in 34 years as the Federal Reserve opted once again to keep interest rates unchanged. However, four voting members opposed the official policy statement. Powell clarified that he will remain on the Federal Reserve Board of Governors rather than acting as a "shadow chair," noting that the four dissenting votes indicate the committee’s focus is shifting toward a more neutral stance.

Donald Trump has rejected an Iranian proposal, stating that the naval blockade will persist until a nuclear deal is secured, while Iran warned of "unprecedented" military action in response. According to U.S. media, Trump described the blockade as "in some ways more effective than bombing." The U.S. military has reportedly drafted plans for a "brief but powerful" strike against Iran to break the current stalemate. Crude oil prices surged over 7% during intraday trading as Trump urged Iran via social media to "make a wise decision quickly." According to Iranian media, officials stated that the military's restraint thus far was intended to provide space for diplomacy and give Trump an opportunity; however, they warned that if their conditions are rejected, the "enemy will soon face a very different response."

U.S. durable goods orders rebounded sharply in March as the AI investment boom continued, with core capital goods orders marking their largest increase in nearly five years. Excluding aircraft and defense equipment, core capital goods orders jumped 3.3% month-over-month, significantly exceeding market expectations of 0.5% and marking the largest single-month gain since mid-2020. This year-long strength in capital investment is driven partly by the sustained corporate build-out of artificial intelligence infrastructure.

Microsoft (MSFT)'s revenue grew beyond expectations last quarter, fueled by a 40% surge in Azure cloud income, despite an unexpected slowdown in capital expenditure. In the third fiscal quarter, revenue rose 18% year-over-year, while EPS grew 23% — beating analyst estimates by over 5%. Annualized AI revenue surpassed $37 billion, up 123% year-over-year, and commercial Remaining Performance Obligations (RPO) doubled. While Intelligent Cloud revenue grew 30%, Azure’s performance slightly beat forecasts, even as the segment's margin fell 1.8 percentage points. Capital expenditure growth slowed to 49% from the previous quarter's 66%, dropping nearly 15% from its record high. Performance in Windows and Xbox remained weak, with More Personal Computing revenue down 1%, though search advertising revenue rose 12%. Shares initially fell over 3% after-hours before recovering.

Google’s parent company, Alphabet (GOOG), saw Q1 revenue grow by a better-than-expected 22%, with AI driving gains across multiple business segments and cloud revenue soaring 63%. First-quarter revenue rose to $109.9 billion (against expectations of $107.1 billion), while net profit surged 81% to $62.6 billion, aided by $36.9 billion in non-liquid equity gains. The CEO remarked that "AI is lighting up every corner of the business," as search volume hit record highs. Google Cloud’s order backlog nearly doubled quarter-over-month to over $460 billion, and Gemini’s paid monthly active users grew by 40%. Alphabet shares rose 6.63% in after-hours trading.

Meta (META)’s Q1 revenue increased 33%, slightly exceeding expectations, but the company raised its full-year capital expenditure forecast to a maximum of $145 billion. First-quarter revenue reached $56.3 billion (versus the $555.1 billion analyst estimate) and net profit hit $26.8 billion, representing year-over-year growth of 33% and 61%, respectively. Due to rising prices for hardware components, the company increased its annual capex guidance to between $125 billion and $145 billion. Meta's stock fell nearly 7% in after-hours trading following the announcement.

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