NextFin News - U.S. stocks surged Thursday in the best session in roughly two weeks, as a pullback in Treasury yields following dovish signals from a Federal Reserve official ignited a broad rally led by enterprise software names. The session's central tension pitted growing political pressure on the Fed — with Vice President JD Vance saying the central bank should cut rates to make homes more affordable, directly at odds with Chair Kevin Warsh's recent hawkish signals — against a market that took the yield relief as an unambiguous green light for risk assets. The rally also exposed a widening split within AI-infrastructure earnings reactions: some blowout quarters were rewarded generously, while others were met with skepticism despite beating estimates.
The Dow Jones Industrial Average rose 1.18%
The S&P 500 Index rose 1.06%
The Nasdaq Composite advanced 1.40%
Stock & Sector Performance
Enterprise software was the standout sector of the session, extending a rally that began with Snowflake's blowout report released Tuesday evening. Snowflake shares soared 24% as investors digested the strength of its results, and the momentum spread broadly through the afternoon as Datadog, Amplitude, Zscaler, DocuSign, and Salesforce shares all jumped after Federal Reserve Governor Christopher Waller signaled support for keeping rates steady, pulling the 10-year Treasury yield down to 4.756% and the 2-year yield to 4.328%. The rally stood in sharp contrast to two other closely watched AI-infrastructure names: Hewlett Packard Enterprise fell despite reporting record fiscal third-quarter revenue of $12.2 billion, up 34% year-over-year and well ahead of the $11.91 billion consensus, with adjusted earnings per share of $1.11 versus a $0.93 estimate; the company also raised its full-year revenue growth outlook to 34%–37% from 29%–33% and its EPS guidance to $3.75–$3.85 from $3.35–$3.45, yet shares still declined roughly 4%–8% as investors questioned the pace of converting a record order backlog into revenue. Broadcom extended its own muted reaction from Wednesday, falling further Thursday despite last night's beat-and-raise quarter, while NetApp dropped about 9% on cash-flow concerns.
Magnificent Seven trading was centered on Nvidia, which is set to acquire AI platform Hugging Face for $12.93 billion, extending the company's aggressive push to broaden its software and AI-model capabilities beyond hardware. Reliable closing figures for Apple, Microsoft, Amazon, Alphabet, Meta, and Tesla were not available in today's reporting at publication time, though the sharp Nasdaq advance suggests broad participation from mega-cap tech alongside the software-sector rally.
After the Bell: Zscaler Answers Its Own Guidance Scare
Zscaler capped the day with fiscal fourth-quarter and full-year 2026 results that carried real signal value given the context heading in. Three months ago, the company beat both revenue and earnings estimates but paired that beat with an early fiscal 2027 framework calling for growth of just 16%–17% — a sharp deceleration from the roughly 25% pace the business had been running — and the stock fell anyway as investors read the guide-down as evidence of structural slowing. Tonight's report pushed back directly on that narrative: fourth-quarter revenue reached $898.2 million, up 25% year-over-year and above the company's own $875–$878 million guidance range, while annual recurring revenue rose 25% to $3.771 billion, including $246 million of net new ARR; excluding the recent Red Canary acquisition's $141 million ARR contribution, organic ARR growth still ran at 20%. Full-year fiscal 2026 revenue came in at $3.353 billion, with non-GAAP EPS of $4.21 and free cash flow of $779.1 million, a 23% margin. The GAAP net loss narrowed sharply to just $3.4 million from a wider loss in the prior quarter. The key signal for investors: growth held well above the cautious 16%–17% framework management had set in May, suggesting last quarter's guide-down may have been conservative positioning rather than a genuine inflection toward slower demand — a distinction the market will likely reward or punish sharply once trading resumes, given how harshly it treated the softer framework three months ago.
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