Big Tech has completely reversed its April tariff sell-off and is boosting confidence on Wall Street
A strong pair of earnings reports from Microsoft and Meta Platforms appears to have reignited excitement around the artificial intelligence trade and may be, at least temporarily, pushing tariff worries from investors' minds. The postearnings rallies for both stocks helped push the Roundhill Magnificent Seven ETF (MAGS) back above its April 2 close, which occurred just before President Donald Trump brought out his tariff charts. The Technology Select Sector SPDR Fund (XLK) , which counts Microsoft as one of its biggest holdings, has also regained its pre-"liberation day" level. XLK 1M mountain This tech fund has fully recovered from its post-April 2 declines. "Investors were uplifted by the buoyant sales growth in Microsoft's cloud computing services, while reassured by Meta's pledge to become the 'AI leader,'" Deutsche Bank macro strategist Marion Laboure said in a note to clients. Those milestones still leave both funds down for the year, but they could create a sigh of relief among chart-focused traders. There is also some evidence that institutional investors are now dipping their toes back into the pool after scaling back during a volatile April, leaving it to short-covering hedge funds and retail to pick up the slack . "Coming into today, we had not seen significant long buying in single stocks from our largest longer duration investors (living in a 'buyers live higher' tape). However, the flow on our trading desk so far today has a different flavor and is more constructive," said a Goldman Sachs trading note on Thursday. That renewed confidence among the long-term crowd could be put to the test in the next 24 hours. Investors will be sorting through more tech results on Thursday evening, including Apple and Amazon . You can count Ritholtz Wealth Management CEO and CNBC Pro contributor Josh Brown among those who think the Microsoft breakout might be a unique success story rather than a harbinger for the rest of tech. On the economic front, a key U.S. jobs report will hit before the opening bell on Friday. This is the first federal payrolls report to include data from after April 2, and it follows weekly jobless claims and ADP private sector jobs data that came in worse than expected. — CNBC's Michael Bloom contributed reporting.
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