Wall Street’s Comeback and the Ongoing Risks
The recent comeback of Wall Street on May 1, 2025, underscores the resilience of the market despite economic and political challenges. Although the US GDP shrank by 0.3% in the first quarter – the first decline in three years – a remarkable recovery was achieved through tech gains, grabbing the attention of private investors.
Key Factors of the Turnaround
- Tech Giants as Saviors: Microsoft reported a 13% revenue increase ($70.07 billion), driven by its Azure cloud business. Net profit rose to $25.82 billion, significantly exceeding forecasts.
- Meta’s Surprise: Meta Platforms also reported a 13% revenue increase, surpassing expectations for profit and revenue. Shares of both companies surged in after-hours trading (Microsoft +8%, Meta +4%).
- Investor Sentiment: Solita Marcelli (UBS) emphasizes that the “most extreme fluctuations” of Trump’s tariff policy may be over, which could have a stabilizing effect.
Puzzles for Private Investors
Despite the optimism, questions remain: How sustainable is tech growth in the face of a shrinking economy? Can tariff increases under Trump destabilize again? Answers depend on three factors:
- AI Investments: Microsoft CEO Satya Nadella sees cloud solutions and AI as “essential growth drivers”.
- Political Developments: Trade conflicts remain a latent risk, but experts do not expect escalation like in previous phases.
- Market Dynamics: The rapid change in sentiment shows how quarterly reports can overshadow short-term fears – a sign of volatile opportunities for tactical investments.
For investors, this means: Tech stocks with a clear AI strategy continue to offer momentum, but political risks require diversification into defensive sectors like healthcare or consumer goods as a hedge.