Big Tech Pops, But the Underlying Signals Still Flash Caution

Markets rallied Thursday, led by a surge in the Nasdaq after better-than-expected earnings from Microsoft and Meta calmed nerves — at least temporarily — about Big Tech’s ability to navigate the current storm. Microsoft popped 10%, Meta jumped 6%, and the usual suspects in the AI trade—Nvidia, AMD, Broadcom—tagged along for the ride.

The narrative is clear: AI is still hot, digital advertising isn’t dead, and corporate tech budgets haven’t been torched—yet.

Meta reassured investors that ad growth remains steady despite growing tariff pressures, even as a chunk of its ad revenue flows in from Chinese companies. Microsoft echoed the optimism, signaling that enterprise spending hasn’t collapsed, and that AI-fueled demand in its cloud division remains strong, albeit with capacity constraints still looming.

This was enough to push the Nasdaq to a fresh short-term high, gaining back some ground lost after President Trump’s “Liberation Day” tariff announcement on April 2 that sent stocks reeling for most of April.

But if you think this is the start of a new bull market, slow your roll.

Zoom out, and the macro backdrop is still messy. First-quarter GDP contracted. Jobless claims just ticked up again. McDonald’s missed earnings and directly blamed consumers “grappling with uncertainty.” Even General Motors, in a move that got far less airtime than Microsoft’s victory lap, slashed full-year guidance and warned tariffs could cost the company $5 billion.

That’s not exactly recession-proof behavior.

Meanwhile, Treasury Secretary Scott Bessent is beginning to signal that rate cuts could return to the conversation, pointing to falling short-term Treasury yields as a quiet indicator of shifting expectations. On the trade front, there are signs of behind-the-scenes dialogue between U.S. and Chinese officials—early feelers that suggest a willingness to reopen communication, even if concrete outcomes remain distant. The tariff landscape is still uncertain, but both sides appear interested in managing tensions rather than escalating them further.

Globally, markets are absorbing the cross-currents. The yen softened, gold slipped, and the Bank of Japan cut its growth forecast—subtle signs that trade dynamics and rate expectations are weighing on sentiment. With much of Europe and Asia offline for Labor Day, trading volumes were light, and reactions to the U.S. rally were cautious, not euphoric.

This is the market right now: headline-driven, fragile underneath.

Sure, Microsoft and Meta crushed it. That’s great if you’re holding the Magnificent Seven. But let’s not pretend one earnings beat erases beneath-the-surface pressure  showing up in other corners of the economy—from automakers to fast food to consumer sentiment. These aren’t just footnotes. They’re signals.

The AI narrative may be strong, but the broader market is still walking a tightrope. We’re watching a pop, not a pivot. And the smart money knows there’s a big difference.

If you’re navigating this landscape without a framework, you’re reacting. We prefer to read the signals, not the headlines. Keep reading to see Joe’s market analysis this week!