Wall Street Starts May Strong as Apple and AI Drive Sentiment 01/05/2026

HOT stories for today

Market wrap:

• Stocks rallied Thursday, with the S&P 500 closing at a fresh record as strong earnings from Caterpillar and Alphabet helped investors look past renewed U.S.-Iran tensions. The S&P 500 rose 1.02% to 7,209.01, its first close above 7,200. The Nasdaq gained 0.89% to 24,892.31, also setting fresh intraday and closing highs. The Dow Jones Industrial Average surged 790.33 points, or 1.62%, to 49,652.14. Caterpillar jumped nearly 10% after beating quarterly expectations and raising its annual revenue outlook, giving investors a positive read on global industrial demand. The report helped offset some disappointment from the latest GDP data, which showed the U.S. economy grew at a 2% annualized pace in the first quarter, below the 2.2% estimate but stronger than the fourth quarter’s 0.5%.
• Alphabet added another major boost, climbing 10% after revenue topped estimates and the company raised its 2026 capital-spending outlook to as much as $190 billion. Unlike some peers, investors appeared willing to reward higher AI spending because Google Cloud showed clear momentum and stronger demand. That contrasted with Meta and Microsoft, which fell 8.6% and 3.9%, respectively, as investors pushed back on rising capex plans and, in Meta’s case, weaker user growth. The split reaction showed the market is still selective: AI spending is welcome when it comes with visible returns, but punished when the payoff looks less certain. Friday’s session is likely to be driven mainly by geopolitical headlines and developments around Iran, with the economic calendar quiet. Investors will also digest Apple’s earnings, while oil majors Exxon Mobil and Chevron report before the open.

Apple Earnings Beat Turns Focus to AI Future

• Apple topped Wall Street expectations in its fiscal second quarter, powered by strong growth in its high-margin services business and resilient demand across Macs and iPads, even as iPhone sales narrowly missed forecasts. The results marked the company’s first major test since announcing that Tim Cook will step down as chief executive later this year. The company reported earnings of $2.01 a share on revenue of $111.18 billion, ahead of analyst expectations, while overall revenue climbed 17% from a year earlier. Services revenue reached nearly $31 billion and once again became a key profit driver, helping gross margins rise above forecasts. 
• Investors also welcomed Apple’s announcement of an additional $100 billion stock buyback and a dividend increase, reinforcing the shareholder-friendly approach that has defined much of the Tim Cook era. Still, the bigger story around Apple is increasingly becoming artificial intelligence and a leadership transition. Incoming CEO John Ternus, a longtime hardware executive who led Apple’s transition to its own chips, is expected to take a more product-focused approach as the company tries to catch up in AI. Apple has already signaled a shift in strategy by partnering with Google’s Gemini AI to improve Siri, a move many investors see as an acknowledgment that the company has fallen behind rivals in generative AI. Analysts are now watching closely for signs that Apple can turn its massive ecosystem into a meaningful AI growth engine rather than relying only on hardware upgrades. The company’s next major catalyst could come at June’s WWDC event, where investors expect Apple to outline a broader AI roadmap under Ternus’ future leadership.

Stocks on the move:

• Blue Owl Capital (OWL): jumped nearly 10% after the private-credit firm said it had made 10 times its investment in SpaceX, selling about half its stake at a $1.25 trillion valuation while retaining the rest.
• Hertz Global (HTZ): surged about 18% after announcing a partnership with Uber tied to autonomous robotaxis and driver-led mobility through its new Oro Mobility unit.
• Uber (UBER): was little changed after the Hertz partnership news.
• Altria (MO): gained more than 5% after first-quarter adjusted earnings beat estimates and the company reaffirmed its full-year profit outlook.
• Carrier Global (CARR): climbed 11% after first-quarter earnings and revenue both topped analyst expectations.

Watchlist: AAPL, CVX, XOM, CL, AMGN, SNDK, WDC, META, NVDA

Key Economic Events Today:

EST time

09:45 am: USD Final Manufacturing PMI
10:00 am: USD ISM Manufacturing PMI and Prices


Earnings

BMC (Before Market Open): Exxon Mobil (XOM), Chevron Corp. (CVX), Linde Plc. (LIN), Aon Plc. (AON), Colgate Palmolive (CL)



The TEFS Analyst team wishes you a successful day!