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The stock market’s rebound was short-lived, with all three main equity indexes closing lower Thursday. Sparking the sell-off was a round of disappointing blue-chip earnings, while market participants also kept an eye on geopolitical headlines, with little sign of a peace deal in sight.
First-quarter earnings season is in full swing, and the latest batch of corporate reports made plenty of noise. Tesla (TSLA), for one, fell 3.6% as the electric vehicle maker’s Q1 beat was overshadowed by a big increase in spending.
Specifically, the company has carved out $25 billion for capital expenditures this year — a notable increase from 2025’s $8.5 billion.
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“We’re investing in and improving our core technologies, battery powertrain, AI software, AI training, chip design, manufacturing — laying the groundwork for significantly increased manufacturing and production,” said CEO Elon Musk on Tesla’s earnings call.
Musk added that the company is also strengthening its supply chain ahead of output increases for its vehicles, as well as for Optimus, its humanoid robot.
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“While we continue to have concerns regarding the company’s spending binge, we are also more bullish on near-term margin and operating cash flow profile,” says CFRA Research analyst Garrett Nelson, who upgraded the Magnificent 7 stock to Hold from Sell. “Moreover, consensus estimates have come down to levels we think are more achievable and now consider the stock’s risk/reward more balanced following TSLA’s recent underperformance.”
Shares are down nearly 17% for the year to date vs the S&P 500’s roughly 4% gain.
IBM hikes dividend but stock dives 8.3%
Elsewhere on the earnings calendar, International Business Machines (IBM) reported first-quarter earnings of $1.91 per share on revenue of $15.9 billion, beating analysts’ estimates for earnings of $1.81 per share on revenue of $15.6 billion.
Big Blue also raised its quarterly dividend by 1 cent to $1.69 per share. IBM is one of the best dividend stocks for dependable dividend growth, having raised its payout for 31 straight years.
But the Dow Jones stock fell 8.3% today after the software giant failed to raise its full-year guidance. Signs that its Red Hat Hybrid cloud business is growing slower than peers also weighed on shares, says Argus Research analyst Jim Kelleher.
Still, Kelleher reiterated a Buy rating on IBM, saying “prospects for this business in 2026 appear to be positive.”
ServiceNow suffers its worst day ever after earnings
ServiceNow (NOW) was another software stock that fell sharply after earnings, sinking 17.6% — its biggest one-day drop on record.
The software-as-a-service (SaaS) platform that uses AI to automate workflows for companies beat on both the top and bottom lines for Q1. However, ServiceNow said that the ongoing conflict in the Middle East impacted deal timing and weighed on first-quarter subscription revenue. The Iran war also caused NOW to give conservative guidance.
“ServiceNow’s Q1 results are good but show lower beat magnitudes. In addition, management took a prudent approach to Q2 cRPO [current remaining performance obligation, a key revenue metric] growth and 2026 guidance to reflect continuing geopolitical headwinds and acquisition integration expenses,” says Oppenheimer analyst Brian Schwartz.
But Schwartz maintained an Outperform (Buy) rating on the tech stock, saying he’s “encouraged that the AI business looks positioned to exceed 10% of total revenue this year given prudent guidance and strong demand for AI technology.”
No signs of progress in the Middle East
As for the conflict in the Middle East, today’s headlines centered on President Donald Trump’s Truth Social post that he has “ordered the United States Navy to shoot and kill any boat, small boats though they may be (Their naval ships are ALL, 159 of them, at the bottom of the sea!), that is putting mines in the waters of the Strait of Hormuz.”
The lack of resolution lifted oil prices Thursday, with front-month West Texas Intermediate crude futures climbing 3% to $95.95 per barrel.
But stocks fell, with the blue-chip Dow Jones Industrial Average declining 0.4% to 49,310, the broader S&P 500 dropping 0.4% to 7,108, and the tech-heavy Nasdaq Composite shedding 0.9% to 24,438.
