Tech Stocks Drive Market Rally Amid Trade Tensions

Alphabet executives expect a "slight headwind" to its advertising business in 2025, primarily from the Asia-Pacific region, due to concerns about the impact of new trade policies. The company's advertising revenue was strong in the first quarter, but executives warned that it's too early to tell the exact impact of macroeconomic conditions. Alphabet is still on track to spend $75 billion in capital expenditures in 2025, mainly on technical infrastructure, and is focused on driving efficiency and productivity throughout the organization.

Major U.S. tech companies reported their first-quarter results, with Alphabet and Intel beating expectations, causing U.S. stock indexes to rally, with the S&P 500 and Nasdaq gaining over 2%. However, trade tensions between the U.S. and China remain a concern, with Intel's CFO warning that tariffs and retaliation have increased the likelihood of a recession. China denied ongoing trade talks with the U.S., contradicting President Trump's claims that talks were underway, adding to market uncertainty. Despite strong tech gains, the influence of leading tech stocks is waning, with the Roundhill Magnificent 7 ETF down 17% for the year.

European stock markets closed higher on Friday, with the Stoxx 600 index rising 0.35%, as earnings reports from the region were well-received despite ongoing trade uncertainty. The DAX in Germany was up 0.8% and the CAC 40 in France rose 0.45%. The UK's FTSE 100 closed 0.1% higher, extending its longest winning streak since 2019. Shares of Safran rose 4.3% after the jet engine maker beat expectations, while defense contractor Saab AB's shares initially fell before trading up 0.16%. Asian markets rose as Wall Street notched a three-day win streak, with tech stocks rallying after the US toned down tariff rhetoric and China reportedly considered suspending levies.

AbbVie is set to report earnings before the bell on Friday, with its stock having risen 6% since its last earnings report but down 14% for the month. The biotech sector is under pressure, with the S&P Biotech ETF down 12.5% over three months. The financial sector is in focus, with major banks such as JPMorgan, Wells Fargo, and Goldman Sachs seeing gains in the past week but still below their 52-week highs. Existing home sales have dropped to 2019 lows, with prices softening, affecting homebuilders like Pultegroup, KB Home, and Lennar, although the S&P Homebuilders ETF rose 2.5% on Thursday. Meanwhile, Nvidia and Amazon executives indicate that demand for AI data centers is not slowing, boosting data center-related stocks. Airlines are seeing soft demand, with Alaska Air's CEO citing a softening in domestic leisure travel, causing its shares to drop 10% on Thursday. The chip sector has been a bright spot, with the VanEck Semiconductor ETF rising 5% on Thursday, driven by gains in Nvidia, Advanced Micro Devices, and Microchip Technology.

Jim Cramer attributes the recent market rally to strong earnings results and the White House's reduced noise on business-related issues, particularly its backtrack on rebuking Federal Reserve Chair Jerome Powell. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all saw significant gains, led by megacap tech stocks such as Nvidia, Meta, and Amazon. Cramer notes that a batch of strong earnings reports and the White House's restraint in response to China benefited the market, while "safety stocks" like Procter & Gamble and PepsiCo pulled back after disappointing earnings. Cramer emphasizes that the government's power over stocks is significant and that investors value the independence of the Federal Reserve.

Jim Cramer remains optimistic about the data center buildout theme despite investor concerns over tariffs, recession, and excessive AI spending. He cites a lack of evidence for a slowdown in AI infrastructure buildout, pointing to statements from Amazon and Nvidia executives, and strong earnings results from companies like Vertiv and GE Vernova. Cramer suggests owning stocks in sectors related to AI buildout, including semiconductor companies, data center builders, and power utilities, naming specific companies like Broadcom, Nvidia, and Constellation Energy.

The S&P 500 rose 0.74% to 5,525.21, the Nasdaq Composite added 1.26% to 17,282.94, and the Dow Jones Industrial Average gained 0.05% to 40,113.50 on Friday. The gains were driven by major tech names, with Alphabet rising 1.5%, Tesla popping 9.8%, Nvidia advancing 4.3%, and Meta Platforms gaining 2.7%. The major averages notched their second positive week out of three, with the S&P 500 gaining 4.6%, the Nasdaq climbing 6.7%, and the Dow rising 2.5%. Investors remain cautious due to uncertainty around President Donald Trump's tariffs, but some analysts are optimistic that the worst of the tariff-induced uncertainty is over. Earnings from big hyperscaler firms such as Microsoft and Amazon are expected to be a key driver for markets next week.

Stock futures rose on April 24, 2025, following a three-day winning streak for major averages. Alphabet's strong quarterly results boosted its shares by 5% in extended trading, while Intel's disappointing guidance caused its stock to fall over 5%. The S&P 500 has a week-to-date gain of nearly 4%, driven by advances in megacap technology names. Investors are awaiting earnings reports from other key names and consumer sentiment data. Analysts expect "pretty decent" Big Tech earnings to potentially extend recent market gains, despite elevated volatility and uncertainty around trade tensions.