S&P, Nasdaq hit all-time highs

U.S. stocks are back in full risk-on mode. The S&P 500 and Nasdaq hit new highs at the turn into May after a huge April rally, and the move was strong enough to drown out a lot of things that would normally spook investors — sticky inflation, higher Treasury yields, and fresh geopolitical tension. What changed is simpler than the price action makes it look: earnings from the biggest companies came in strong enough to keep the AI story alive, and that gave traders permission to keep buying. (cnbc.com) ### What actually happened? On Thursday, April 30, the S&P 500 closed above 7,200 for the first time, finishing at 7,209.01. The Nasdaq closed at 24,892.31, also a record. By Friday, May 1, both indexes were pushing to fresh intraday highs again as the rally carri(cnbc.com)he Dow up 7.1% — the best month since 2020 for the first two and the best since late 2024 for the Dow. (cnbc.com) ### Why did the market rip higher? Earnings did the heavy lifting. Alphabet jumped after beating expectations and lifting its 2026 capital spending range. Apple also impressed, helping keep confidence high in the biggest companies even as investors nitpicked other(cnbc.com)raising its revenue outlook, which mattered because it reads less like an AI trade and more like a broader-economy signal. (cnbc.com) ### Why are people talking about AI again? Because the market still wants one answer above all others: is the spending boom turning into real revenue? This week’s results suggested the answer is at least partly yes. Investors rewarded companies where AI spending l(cnbc.com)ng looked huge but the payoff still felt vague. Basically, the market is no longer cheering capex by itself — it wants proof the money is buying growth, not just bigger server bills. (schwab.com) ### So is this just a Magnificent Seven story? Mostly, yes — and that’s both the power source and the risk. The biggest companies are still doing an outsized share of the index’s lifting. That concentration makes the rally look stronger than the average stock’s experienc(schwab.com)e market fast. The setup is a bit like building a wide bridge on a narrow set of pillars — it works until one pillar cracks. (cnbc.com) ### What about the economy underneath it? The backdrop is mixed, not clean. U.S. GDP growth for the first quarter came in at a 2% annualized pace — better than the prior quarter’s 0.5%, but a touch below estimates. Treasury yields are still elevated, and oil price(cnbc.com)lly driven by suddenly perfect macro data. It’s a rally driven by investors deciding earnings matter more right now than the macro noise. (cnbc.com) ### Are earnings expectations moving too? Yes — and that helps explain why buyers have stayed aggressive. LSEG IBES data showed analysts lifting expectations for first-quarter S&P 500 profit growth to 27.8%, which would be the strongest quarterly growth since the (cnbc.com)he earnings line is rising with the price line. (money.usnews.com) ### What’s the catch from here? The catch is that the market now has less room for disappointment. Valuations are richer, yields are still a headwind, and the same AI spending that e(money.usnews.com)uch of it rests on a small group of giants staying nearly flawless. (cnbc.com) ### Bottom line? This rally is real, but it is narrow and demanding. Stocks are making new highs because the market still believes the biggest companies can turn huge AI spending into huge profits. If that belief holds, records can keep coming. If it wobbles, the (cnbc.com)