Tesla contributed additional downside for the Nasdaq, slipping 3.5%. Although the electric-vehicle manufacturer reported quarterly profit above consensus estimates, earnings were well below year-ago levels. Chief Executive Elon Musk has urged investors to concentrate on long-term initiatives such as robotaxis and humanoid robots rather than the recent soft patch in vehicle sales, but Thursday’s results did little to temper concern about near-term profitability.
Among other technology names, ServiceNow dropped 9.9%. The enterprise-software provider delivered stronger-than-expected earnings, yet its stock continued a decline that began last summer amid questions about future growth rates. By contrast, Meta Platforms jumped 10.4% after the company behind Facebook, Instagram and WhatsApp surpassed profit expectations. Meta also reiterated that it will maintain heavy spending on AI infrastructure, but investors welcomed management’s signal that revenue growth is keeping pace with the additional outlays.
International Business Machines added 5.1% after topping forecasts on both the top and bottom lines. The company’s results reinforced a theme of stable demand for corporate IT services even as businesses review discretionary budgets. IBM’s advance helped offset part of the drag created by larger technology constituents.
In the airline sector, Southwest Airlines surged 18.7%. The carrier missed consensus profit targets for the latest quarter but issued an earnings outlook for 2026 that exceeded Wall Street projections. Executives cited strong booking trends and the financial impact of newly introduced baggage fees and assigned seating. The upbeat forecast lifted sentiment across travel-related shares.
Market breadth tilted positive, with more S&P 500 constituents rising than falling. Nevertheless, the magnitude of losses in several mega-cap companies kept the overall index in negative territory. After the closing bell, the S&P 500’s price-to-earnings ratio stood near levels last seen during the 2021 bull run, underscoring widespread expectations that corporate profits must continue to advance to justify valuations. Historical data from the Federal Reserve’s Financial Accounts of the United States show that sustained earnings growth has been the primary driver of long-term equity performance.
On the economic front, investors weighed mixed signals on inflation and consumer demand ahead of next week’s Federal Reserve policy meeting. Treasury yields were little changed, offering limited direction to equity traders. Meanwhile, commodity markets saw their own rapid reversals: gold futures, up early on safe-haven buying, ended lower after the dollar strengthened and risk sentiment improved into the close.
Thursday’s volatility followed a pattern seen throughout the first month of 2026, with rapid intraday moves catalyzed by earnings surprises, shifting expectations for interest-rate cuts and the escalating race among technology firms to commercialize AI applications. Analysts noted that algorithmic trading and low holiday-season liquidity may have amplified price swings.
Looking ahead, roughly half of the S&P 500 companies are scheduled to report results over the next two weeks. Investors will scrutinize management commentary on capital expenditure plans, labor costs and demand elasticity in a higher-for-longer interest-rate environment. Any broad-based evidence that earnings can outpace elevated valuations could determine whether major indexes extend their upward trajectory or retrace recent gains.
Crédito da imagem: Richard Drew
