By Jared Mitovich

U.S. stocks rolled through a divided Federal Reserve, war in the Middle East and a gantlet of tech earnings to wrap up their best month in six years.

The major indexes moved higher on Thursday, powered by strong results from Google parent Alphabet and heavy-machinery giant Caterpillar. In what was a recurring theme for markets in April, enthusiasm for corporate earnings and the AI revolution trumped concerns over conflict, inflation and interest rates.

"The tailwinds from this global industrial build-out can overwhelm the difficulty in absorbing the energy costs," said David Waddell, chief investment strategist at Waddell and Associates. "It's kind of astounding how much they've gone up."

The S&P 500 index rose 1% to a record, while the Nasdaq composite gained 0.9% to close at its seventh record-high of the year. The Dow Jones Industrial Average rose 1.6%, or 790 points.

For the month, the S&P 500 rose 10%, the Nasdaq increased 15% and the Dow added 7%. Both the S&P 500 and the Nasdaq had their best monthly performance since November and April 2020, respectively.

Alphabet surged 10%, ending the session with a market value of $4.65 trillion. Alphabet on Thursday saw the biggest one-day market-cap increase in its history -- and the second-largest on record for a U.S. business.

A new AI darling more than made up for some of the Dow industrials' poor performers. Caterpillar, known for its giant yellow dump trucks and bulldozers, surged 9% to an all-time closing high after reporting AI-fueled demand for its power-generation equipment.

Meta Platforms plunged nearly 9%, wiping out around $175 billion in market cap, while Microsoft slid around 4% and Amazon gained 0.8% as investors closely scrutinized the market's most important companies for signs that their prolific AI spending is paying off.

The heavy flows in and out of Magnificent Seven companies on Thursday isn't about whether they're good long-term bets -- but rather whether they're priced too high for the current market, said Ray Baraldi, chief executive of 2/13 Strategic Partners.

The answer to that question for many investors on Thursday, and for much of April, was: Yes.

"You had the exuberance of what AI could be, and now you're getting the hard scrutiny of what is the reality today," Baraldi said. "You need to see something tangible eventually."

Investors are discounting how rising energy prices will hurt the U.S. economy and instead evaluating stocks based on earnings and growth potential from AI.

The dollar trade also unwound in April as investors saw less of a need to pile into one of the global markets' safest havens. The WSJ Dollar Index has fallen around 1.8% this month.

Bonds and commodities haven't reflected the same optimism about the war's impact as stocks and currencies, though an oil-price surge to wartime highs cooled Thursday. Front-month U.S. crude futures fell to $105 a barrel while Brent crude futures for oil changing hands in June receded to around $114 a barrel.

Prices initially moved higher after Axios reported that President Trump is set to be briefed on new military options for Iran aimed at breaking the deadlock in peace talks.

"It doesn't look like Iran wants to come to the table, and Trump might blow up the table," Waddell said.

December futures for U.S. oil are still around $80 per barrel on expectations that the war won't present a long-term disruption to energy supply.

The Federal Reserve's preferred inflation gauge showed that higher energy prices from the war in Iran ratcheted up pricing pressures in March. First-quarter GDP also came in weaker than economists expected, though still at a 2% pace, as consumer spending slowed.

The 10-year Treasury yield settled at 4.389%, still near its high since the start of a cease-fire between the U.S. and Iran. Oil prices have become the main driver of concerns about inflation, with investors expecting that rising energy prices will keep interest rates steady in the coming months.

"The markets always test the new Fed chair," Waddell said, though he thinks that "we'll at least get one rate cut at year-end -- at least as a token of appreciation."

Write to Jared Mitovich at jared.mitovich@wsj.com

(END) Dow Jones Newswires

April 30, 2026 16:50 ET (20:50 GMT)

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