(Bloomberg) — A rally in big technology companies and a batch of earnings from heavyweights pushed stocks toward a record close in a continuation of a rally fueled by the strength of corporate America.
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With a roughly 1% advance, the S&P 500 briefly touched an all-time intraday high near 6,100. Nvidia Corp. led gains in the corporate giants while Oracle Corp. rose. 7% in a $100 billion joint venture with SoftBank Group and OpenAI, an effort unveiled with President Donald Trump that raises the prospect of the AI craze fueling the market. Netflix Inc. shares rose. By 11% amid the largest increase in the number of subscribers ever. Shares of Travelers and Procter & Gamble rose thanks to strong results.
“We continue to take risks and expect earnings to fuel stocks,” said strategists at BlackRock Investment Institute, including Jean Boivin and Wei Li. “Even in a higher interest rate environment, we still believe stocks can continue to rise as long as fundamentals remain strong.”
For Miller Tabak’s Matt Maley, if this earnings season is good, it’s a rally that could have legs. However, it will take more than simply “beating expectations” to catalyze further significant progress.
Despite a recent attempt to expand the market beyond a handful of giant companies, technology led the way on Wednesday — and most companies in the S&P 500 actually fell. Weak breadth has been a major concern for investors, especially among those wary of high valuations and superficial AI stocks.
Jamie Dimon, CEO of JPMorgan Chase & Co., said there are signs that the US stock market is overheating.
“Asset prices are kind of inflated,” Dimon told CNBC. “You need fairly good results to justify those prices.”
The Standard & Poor’s 500 rose 0.8%. The Nasdaq 100 rose 1.6%. The Dow Jones Industrial Average rose 0.2%. Bloomberg’s “Magnificent Seven” gauge of giant companies rose 1.7%. The Russell 2000 index fell 0.6%.
The yield on the 10-year Treasury note rose four basis points to 4.61%. Bloomberg Dollar Spot Index fluctuates.
“Markets are reacting positively to the initial wave of Trump’s policies, with investors showing enthusiasm reminiscent of the period leading up to the election as they breathe a sigh of relief over tariff announcements and the early stages of the earnings season,” said Mark Hackett of “Markets.” At the national level.
Hackett also noted that despite the high level of profits, the market is showing amazing resilience.
“A breakout to a new record high would activate bulls, as earnings seasons have been volatile in recent quarters,” he concluded.
After the S&P 500 rose 24% in 2023 and 23% in 2024, the lofty valuations have sparked some debate about whether the benchmark index will be able to deliver such performance again this year.
“Successive annual gains of more than 20% for the S&P 500 do not leave U.S. stocks in need of a pullback, as history shows that the market has typically continued to deliver strong, if more subdued, returns in the following year,” he said. Jeff Schulz at ClearBridge Investments. “Moreover, the current rally is not the longest without a correction.”
Schulz also noted that earnings growth has been largely concentrated among a small group of stocks in recent years. This is expected to shift in 2025 with the expansion of profit sharing, which should improve the relative performance of SMEs and laggards in value.
“As we continue to closely monitor the new administration’s next moves, investors should not lose sight of the fundamentals that remain favorable for US stocks,” said Soletta Marsili, of UBS Global Wealth Management. “Without taking any one-name views, we continue to like technology, utilities and financials, and see value in using structured strategies to navigate near-term volatility.”
The “January effect” in the stock market has begun to take shape so far, as stocks have performed strongly all month, according to John Creekmore of Creekmore Wealth Advisors.
“Investors are now focusing more on profits and hopes for tax cuts and deregulation from the new Trump administration, and less on fears of fewer interest rate cuts from the Fed this year,” he noted.
The Nasdaq 100 has nearly doubled since the start of 2023, adding $14 trillion of value in the process. Evercore ISI’s Rich Ross is ready for this rally to continue, shrugging off concerns about a familiar enemy: bond yields.
Treasury prices jumped to multi-month highs last week, as investors analyzed economic data for clues about the next interest rate cut by the Federal Reserve. The yield on US 10-year bonds has fallen since then after reaching a relative strength reading that usually indicates a decline. Pair that with positive technical signals and the Nasdaq 100 and S&P 500 look set to hit all-time highs in the first quarter, according to Ross.
“Ultimately, technology remains in a prime position to continue driving this market higher,” Ross said.
The most prominent features of the company:
Netflix Inc. shares rose. After the streaming company announced the largest quarterly increase in subscribers in history, boosted by its first major live sports events and the return of the Squid Game.
Salesforce Inc. CEO Marc Benioff said there will be “thousands” of deals for the new Agentforce AI product in the current fiscal quarter.
Google subsidiary Alphabet has won a UK court ruling barring Russian media companies from seizing the tech giant’s global assets to recover fines imposed by a Russian court that have now accrued interest worth several times more than the global economy combined.
United Airlines Holdings Inc. expects strong first-quarter earnings as the company benefits from strong demand during the winter months, a surprising shift from a typically slow travel period.
Procter & Gamble’s organic sales beat estimates with higher volume, a change from previous quarters where most of the company’s growth came from higher prices.
Johnson & Johnson said a strong dollar would reduce 2025 revenue and profits, pushing its forecasts below analysts’ expectations and pushing its shares lower.
Abbott Laboratories expects first-quarter earnings to be lower than expected but full-year earnings are in line with Wall Street estimates as the healthcare company points to strong demand for its medical devices as a driver of growth this year.
Ally Financial Inc.’s profits rose. For the fourth quarter, the net interest margin exceeded analyst estimates and expenses and provisions for bad debts decreased.
Main events this week:
Consumer confidence in the euro zone, Thursday
US unemployment claims, Thursday
Bank of Japan monetary policy meeting on Friday
Euro zone manufacturing and services purchasing managers’ index (HCOB), Friday
University of Michigan Consumer Confidence, Existing Home Sales, Global S&P Manufacturing and Services PMI, Friday
Some key movements in the markets:
Stocks
The S&P 500 rose 0.8% as of 12:51 PM New York time
The Nasdaq 100 rose 1.6%.
The Dow Jones Industrial Average rose 0.2%
MSCI World Index rose 0.7%
The Bloomberg Magnificent 7 Total Return Index rose 1.7%.
The Russell 2000 index fell 0.6%.
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.1 percent to $1.0416
The British pound fell 0.2 percent to $1.2320
The Japanese yen fell 0.7 percent to 156.61 yen to the dollar
Cryptocurrencies
Bitcoin fell 2.2% to $104,426.78
Ethereum fell 1.5% to $3,283.7
Bonds
The yield on the 10-year Treasury note rose four basis points to 4.61%.
The yield on 10-year German bonds rose two basis points to 2.53%.
The yield on British 10-year bonds rose four basis points to 4.63%.
Goods
West Texas Intermediate crude rose 0.1% to $75.93 a barrel
Spot gold rose 0.5 percent to $2,757.68 per ounce
This story was produced with assistance from Bloomberg Automation.
–With assistance from Cecil Goucher, Sujata Rao, Robert Brand, and Aya Wagatsuma.
