US stocks rally to the finish of their best month since 2020, even as oil prices whipsaw

NEW YORK (AP) — The U.S stock market motored toward another record Thursday as profits keep piling up for Alphabet, Caterpillar and other big businesses. The gains came after the latest whipsaw moves for oil prices, which surged toward their highest levels since the war with Iran began only to quickly regress.

The S&P 500 rallied 1% and is set to top its all-time high set earlier this week. The Dow Jones Industrial Average was up 822 points, or 1.7%, with an hour remaining in trading, and the Nasdaq composite was 0.8% higher and close to setting its own record.

Alphabet led the way and rallied 9.1% after the owner of Google and YouTube reported profit for the latest quarter that almost doubled analysts’ expectations. Investments in artificial intelligence “are lighting up every part of the business,” CEO Sundar Pichai said. It's the latest company to deliver fatter profits for the start of 2026 than analysts expected, even with very high oil prices and uncertainty about the economy.

Wall Street's strength followed manic swings in the oil market, where prices surged overnight on worries that the Iran war will affect the flow of crude for a long time. Iran has closed the Strait of Hormuz to oil tankers, keeping them pent up in the Persian Gulf and away from customers worldwide, while a U.S. Navy blockade is preventing Iran from selling its own oil.

Traders are always buying and selling contracts for different kinds of oil, going out for many months. In the most actively traded part of the market for Brent crude, for delivery in July, the price got as high as $114.70 per barrel overnight. It then fell back toward $107 before settling at $110.40, nearly unchanged from the day before.

So far during the war, the peak price for the most actively traded Brent contract is $119.50, which was set last month.

In a less actively traded corner of the Brent market, the price for a barrel to be delivered in June briefly went above $126 overnight before pulling back toward $114.

Brent's price is still much more expensive than the roughly $70 level it was at before the war. But the morning's easing in prices, along with the continuing flood of better-than-expected profit reports from U.S. companies, helped keep Wall Street near its records.

Caterpillar soared 10.3%, Eli Lilly jumped 10.6% and O'Reilly Automotive leaped 7.8% after all delivered profits for the latest quarter that topped analysts’ expectations. That’s big because stock prices tend to follow the track of corporate profits over the long term.

Still, a better-than-expected result isn’t always enough to boost a stock’s price if it’s already shot much higher.

Meta Platforms tumbled 7.9% even though the company behind Facebook and Instagram made more profit last quarter than expected. Investors focused more on Meta’s increased forecast for how much it will spend on data centers and other investments this year as it builds out its AI capabilities, up to a range of $125 billion to $145 billion.

Doubts are still high among some investors about whether all the AI spending by Meta and other companies will produce enough profit and productivity to make it worth it.

Microsoft fell 4% after likewise raising its forecast for investments and other capital spending. But analysts also said accelerating trends at its Azure business were encouraging.

Amazon rose 0.3% after swinging between gains and losses through the day. It blew past analysts’ expectations for earnings in the latest quarter.

In the bond market, Treasury yields eased after oil prices gave up their big overnight gains. Reports also suggested the U.S. economy's growth accelerated by less in the first three months of the year than economists expected, while a measure of inflation worsened in March by about as much as expected.

A separate report said that fewer U.S. workers applied for unemployment benefits last week in an indication of fewer layoffs even though companies are announcing large cuts to workforces.

The yield on the 10-year Treasury eased to 4.38% from 4.42% late Wednesday.

In stock markets abroad, indexes rose in Europe following a weaker finish in Asia.

London’s FTSE 100 jumped 1.6% after the Bank of England kept its main interest rate on hold. That followed similar decisions by the U.S. Federal Reserve on Wednesday and the Bank of Japan on Tuesday to keep their rates unchanged.

Germany's DAX returned 1.4%, and France's CAC 40 rose 0.5% after the European Central Bank also held its own interest rates steady.

Hong Kong’s Hang Seng lost 1.3%, while stocks added 0.1% in Shanghai after a report said China’s factory activity slowed slightly in April but remained in expansion territory for the second month.

AP Business Writers Chan Ho-him and Matt Ott contributed to this report.