Wall Street Daily (May 1): US stocks generally rose on Thursday, with the rebound showing greater 'breadth' and risk appetite spreading further; small-cap stocks led the way, earnings reports triggered a reassessment of tech stocks, gold rose/oil fell

Summary: US stocks rebounded across the board on Thursday, with the S&P 500 up 1.02%, Nasdaq up 0.89%, Dow Jones up 1.62%, and Russell 2000 up 2.21%. This rebound was no longer driven by a few large tech stocks alone; small caps, the Dow, and multiple non-tech sectors strengthened simultaneously, with risk appetite showing broader diffusion. The VIX dropped to 16.89, declining -10.21% in a single day, indicating a significant retreat in market hedging costs. The most critical marginal change of the day came from oil prices retreating from highs, easing concerns about reflation and interest rate pressures; meanwhile, Google's earnings report reinforced the narrative that 'AI investments are translating into revenue,' but Meta, Microsoft, and Nvidia faced pressure, reminding investors: the AI supply chain is entering a phase where capital efficiency and return paths are being more rigorously scrutinized. Sector-wise, industrials, utilities, and healthcare showed broad strength, while technology lagged behind. In terms of major asset classes, the US Dollar Index fell 0.86%, gold rose 1.69%, crude oil fell 2.84%, and Bitcoin rose 0.41%.

I. Major Events

1. Google's earnings report reprices the standards for AI winners

Google’s Q1 revenue grew 22% year-over-year to $109.9 billion, with Google Cloud revenue reaching approximately $20 billion, up 63% year-over-year. Cloud operations have more directly translated AI demand into revenue and profit indicators, driving GOOG up 9.97%. By contrast, within the same round of tech earnings reports, Meta raised its 2026 capital expenditure guidance to $125-$145 billion, causing META to fall 8.55%; MSFT fell 3.93%, NVDA fell 4.63%. The market has not rejected the AI direction, but pricing is becoming more clearly stratified: it is more willing to pay a premium for investments that can deliver faster monetization and cash flow, while being tougher on companies whose returns remain unclear and whose capital expenditures continue to rise.

2. Oil prices rapidly retreated from war-time highs

AP reported that oil prices quickly retreated after nearing levels last seen during the Iran conflict, with local market data showing crude oil down 2.84%. This change was particularly crucial for risk asset pricing that day: the previous day, rising oil prices had weighed on small caps and traditional heavyweights, but after oil prices reversed downward on Thursday, concerns about reflation and continued interest rate hikes eased simultaneously. Risk budgets thus spread outward from a few large tech stocks, with the Russell 2000 up 2.21%, IWM up 2.16%, and XLI up 2.74%.

3. GDP and PCE jointly constrain the rate-cut narrative

The US Q1 GDP grew at an annualized rate of 2%, a significant recovery from the 0.5% in Q4 2025, with core domestic demand components growing by 2.5%. However, the March PCE rose to 3.5% year-on-year, with core PCE up 3.2% year-on-year, indicating that inflationary pressures remain unresolved. With Powell nearing the end of his term as chairman and Warsh set to take over, the Fed is facing a combination of decent growth, sticky inflation, and increasing committee divisions. For the stock market, growth resilience can still support earnings expectations, but the desire for rate cuts will continue to be constrained in the short term by inflation and policy uncertainty.

II. Major Trends

Thursday’s rebound was more “broad-based.” Extending the view to two weeks, SPY rose from 1.66% to 2.42%, DIA from 0.86% to 2.31%, IWM from 1.00% to 2.97%, and RSP from 0.34% to 1.40%. The simultaneous acceleration in small-cap, Dow, and equal-weight indices indicates that capital is no longer solely concentrated around a few tech-heavy weights but is beginning to flow back into peripheral assets previously suppressed by oil prices and interest rate pressures.

The medium-term structure remains tilted towards technology and high-Beta sectors. Over a three-month horizon, QQQ rose 7.51%, continuing to outperform DIA's 1.95%; IWM climbed 7.25% over three months, higher than SPY’s 4.14%. The market hasn’t retreated from growth or risk assets. On the contrary, following the pullback in oil prices and the decline in VIX, capital has been more inclined to seek out areas with higher elasticity. The difference now is that within technology, there is no longer a uniform rise or fall; AI-related earnings reports are reshuffling the weightings.

The weighting structure remains uneven. SPY gained 2.42% over two weeks, while RSP increased by 1.40%, showing that market-cap weighting still outperforms equal weighting. MAGS rose 1.42% over two weeks and only 0.14% in three months, whereas XMAG increased by 2.17% over two weeks and 4.60% in three months. These figures point to the same conclusion: leading tech stocks are not currently the strongest group, and non-leading large-cap combinations have shown steadier mid-term performance. Thursday’s substantial rise in GOOG somewhat masked the pressures on META, MSFT, and NVDA, signaling that within the tech sector, the trend has shifted from “collective gains” to clearer differentiation between winners and losers.

Sector rotation also carries noticeable macroeconomic undertones. XLI, XLU, XLV, XLRE, and XLP all rose more than 1%, while XLK increased by only 0.25%. The strength in industrials relates to economic resilience and expectations for AI-driven power and equipment demand. The simultaneous recovery in utilities, healthcare, real estate, and consumer staples appears more like a valuation repair following easing interest rate pressures. Overall, the rally is no longer just about “tech dominance,” but rather a risk rebalancing triggered by falling oil prices, lower volatility, and earnings validation.

III. Market Sentiment

VIX closed at 16.89, dropping -10.21% in a single day. The rapid decline in volatility suggests that concerns over continued oil price spillover, amplified Fed divergence, and index pullbacks from recent highs have significantly eased. Levels near 16-17 aren’t extremely optimistic, but compared to the previous day, investors' “insurance premium” for risk assets has noticeably decreased.

The CNN Fear & Greed Index rose to 67 from a previous value of 63, remaining in the greedier range. This change corroborates the rebounds seen in small-caps, the Dow, equal-weight indices, and multiple non-tech sectors: the improvement in risk appetite isn’t just superficial. However, the intense divergence within tech also signals that capital isn’t blindly chasing gains but is instead concentrating more on directions with clearer paths to profit realization.

The options market also reflects stronger willingness to absorb risks. According to Cboe’s snapshot at 15:15 CT on the same day, the total Put/Call ratio was 0.72, with index options at 0.93 and equity options at 0.62. The overall ratio fell below the previous day’s level, and the equity options ratio was even lower, indicating a more pronounced rebound in bullish participation at the individual stock level. Meanwhile, the fact that index options’ Put/Call ratio remained higher than that of equity options shows that institutions retained some hedging at the index level. Taken together with VIX, the CNN Fear & Greed Index, and Put/Call ratios, the market has further shifted from “cautious recalibration” toward “selective risk expansion.”

IV. Market Scan

1. Index ETFs

Index ETFs moved higher across the board, but the leadership structure differed markedly from the previous day. SPY +0.99%, QQQ +0.93%, DIA +1.63%, IWM +2.16%. IWM and DIA outperformed QQQ, indicating a diffusion of capital from tech-heavy weights to small caps and traditional weights. The pullback in oil prices alleviated inflation and interest rate pressures, to which small caps were more sensitive, thus exhibiting greater elasticity. The Dow benefited from industrial strength and expectations of earnings resilience, performing better as a result.

2. Sector Performance

The industry sector saw broad-based recovery, with XLI up 2.74% leading the pack, followed by XLU at 2.56%, XLV at 2.21%, XLRE at 1.74%, and XLP at 1.68%. XLK lagged behind at 0.25%. The strength in industrials was linked to expectations for AI-related power chain demand, equipment needs, and economic resilience. Utilities, real estate, and healthcare sectors rose in tandem, likely driven by valuation adjustments following easing interest rate pressures. The technology sector's underperformance was primarily due to GOOG's strong gains being offset by declines in META, MSFT, and NVDA.

3. Seven tech giants

The Magnificent Seven experienced the most pronounced divergence of the day. GOOG surged 9.97% on its own, while TSLA also rebounded with a 2.37% gain. META fell 8.55%, NVDA dropped 4.63%, and MSFT declined 3.93%, significantly dragging down performance, with MAGS overall still down 0.51%. Alphabet demonstrated that its AI investments are monetizing faster through cloud revenue and profit cues, while Meta faced more direct pricing pressure due to upward revisions in capital expenditure. Market sentiment toward AI remains strong, but focus has shifted more towards cash flow and return timelines.

4. Chinese Equities

Chinese concept stocks rebounded broadly. BIDU led the way with a 4.56% gain, followed by NTES at 3.54%, KWEB at 2.71%, BILI at 2.66%, PDD at 2.26%, and JD at 2.09%, all rising over 2%. FUTU lagged relatively with a 0.86% increase. A decline of 0.86% in the US Dollar Index, along with a pullback in VIX and small-cap strength, created an environment more conducive to high-beta asset recovery. The rally in Chinese stocks wasn't driven by any single company but appeared to be more of a beta rebound following improved risk appetite.

5. Cryptocurrencies

Bitcoin rose 0.41%, a modest gain, but crypto-related stocks showed stronger momentum. MARA surged 11.85% to lead the way, while RIOT climbed 7.88%, MSTR gained 4.59%, COIN rose 3.32%, and HOOD increased 2.37%, all moving higher in unison. CRCL bucked the trend with a 4.90% drop. Bitcoin itself did not see a significant breakout, and the strength in related stocks reflected a combination of 'risk appetite recovery' and 'high-beta proxy repair.' The sharp rise in mining stocks compared to BTC also indicated funds flowing back into higher-elasticity trading targets as volatility declined.

$S&P 500 Index (.SPX.US)$ $SPDR S&P 500 ETF (SPY.US)$ $NASDAQ 100 Index (.NDX.US)$ $Invesco QQQ Trust (QQQ.US)$ $Dow Jones Industrial Average (.DJI.US)$ $State Street® SPDR® Dow Jones Industrial Average® ETF Trust (DIA.US)$ $Russell 2000 Index (.RUT.US)$ $iShares Russell 2000 ETF (IWM.US)$ $Roundhill Magnificent Seven ETF (MAGS.US)$ $USD (USDindex.FX)$ $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $XAU/USD (XAUUSD.CFD)$ $SPDR Gold ETF (GLD.US)$ $CBOE Volatility S&P 500 Index (.VIX.US)$ $CME-Bitcoin RR Futures (MAY6) (BTCmain.US)$ $iShares Ethereum Trust ETF (ETHA.US)$ $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Meta Platforms (META.US)$ $Amazon (AMZN.US)$ $Alphabet-C (GOOG.US)$ $Microsoft (MSFT.US)$ $Apple (AAPL.US)$

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