Stocks muted as 'Magnificent Seven' earnings land; gold nears record

By Amanda Cooper and Lawrence Delevingne

LONDON/BOSTON (Reuters) -Wall Street shares were slightly?higher on Thursday, as investors cheered earnings from Meta, but were disappointed by Microsoft, while the dollar dipped, further boosting gold prices.

The Federal Reserve held rates steady on Wednesday, in line with expectations, with Fed Chair Jerome Powell saying there would be no rush to cut them again, leaving the dollar to drift on Thursday.

Gold often benefits from a weaker dollar and neared record-highs in U.S. market trading hours.?

The first earnings from the group of so-called "Magnificent Seven" megacap tech stocks met with a mixed reaction from investors, many of whom are now scrutinising these companies' AI spending plans in light of the emergence of low-cost Chinese startup DeepSeek that upended equity markets this week.?

"The market has been priced for perfect results from big tech, they have also been used to big tech massively outperforming expectations in recent years," Kathleen Brooks, research director at XTB, said.

?The Dow Jones Industrial Average?rose 0.17%, the S&P 500 was little changed, and the Nasdaq Composite?fell about 0.25%.?

Microsoft beat quarterly revenue estimates, but a downbeat outlook for its cloud computing business pushed its shares down 6%, while Meta forecast first-quarter revenue below market estimates, but pledged to cut costs, lifting its shares by 2%.?

Tesla's fourth-quarter profit margin missed expectations, yet its shares rose by about 2%.

Apple reports results later on Thursday.

"Microsoft, Tesla, and Meta are all making massive AI investments, but investors are now demanding real results," Jacob Falconcrone, Saxo chief investment strategist for Europe, said.

Data earlier on Thursday showed U.S. economic growth slowed in the fourth quarter, but remained robust enough for investors to expect the Fed to lower rates only gradually this year.?

Gross domestic product increased at a 2.3% annualised rate last quarter, below estimates in a Reuters poll for a rise of 2.6%, after accelerating at a 3.1% pace in the July-September quarter, the Commerce Department's Bureau of Economic Analysis said in its advance GDP estimate on Thursday.

"The US consumer has been unstoppable, supported by wealth creation, a strong labor market, and lending," Ellen Zentner, Chief Economic Strategist for Morgan Stanley Wealth Management, said in an email. "Still, inflation is still a bit too high for the Fed's liking and the bar to a March rate cut is rising."

U.S. Treasury yields fell on Thursday in line with falling European government bond yields. The yield on benchmark U.S. 10-year notes dropped 3.3 basis points to 4.522%.

President Donald Trump's policies remain a risk for the Fed's policy outlook, and Saturday is likely to see new tariffs slapped on Canada, Mexico and possibly China.????

The European Central Bank cut interest rates as expected on Thursday and reiterated that euro zone inflation is increasingly under control despite concerns about global trade.

On European markets, the STOXX 600 index hit a new record high, rising 0.86%, in a heavy earnings day that included results from Deutsche Bank, energy producer Shell and retailer H&M.

The euro was flat on the day at $1.04, while sterling dipped 0.1% at $1.243.

The yen, however, strengthened about 0.56% to 154.37 per dollar with Bank of Japan Deputy Governor Ryozo Himino saying in a speech that the central bank will continue to raise interest rates if the economy and prices move in line with its forecasts.?

In commodities, gold rose 1.2% to $2,790 an ounce, near record levels, taking advantage of the drop in the dollar.

Gold prices have risen sharply this week, partly driven by nervousness over Trump's tariff plans and the possibility - albeit distant - of him imposing duties on precious metals imports.

Even though Trump has not mentioned bullion shipments in his tariff plans, traders are racing to borrow gold from central banks, which store the metal in London, following a surge in deliveries to the United States, two sources familiar with the matter said.

"Despite the fact that tariffs on gold in the States are extremely unlikely given that it is a reserve asset, risk managers are taking no chances and moving metal into the States," said StoneX analyst Rhona O'Connell.

Oil prices reversed earlier losses, rising around 0.2% on the day, leaving U.S. crude futures at $72.71 a barrel and Brent crude at $76.78. [O/R]