(Bloomberg) — A rally in big tech and a slew of earnings from corporate heavyweights sent stocks near records in a continuation of a rally fueled by the strength of corporate America.
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With about a 1% advance, the S&P 500 briefly touched its all-time intraday high near 6,100. Nvidia Corp. led gains in megacaps while Oracle Corp. grew 7% in a $100 billion joint venture with SoftBank Group and OpenAI, an effort inaugurated with President Donald Trump that advances the prospects of artificial-intelligence mania powering the market. Netflix Inc. It grew 11% amid its biggest customer gains. Travelers Co. and Procter & Gamble Co. climbed to strong results.
“We remain risk-averse and expect earnings to increase equity,” said Jean Bovin and Wei Li, strategists at BlackRock Investment Institute. “Even in a high-rate environment, we still think stocks can go higher as long as fundamentals remain strong.”
For Matt Maley at Miller Tabak, if this earnings season is good, it’s a rally that could have legs. However, it will take more than just “beating expectations” to drive significance further.
Despite a recent attempt to expand the market beyond a handful of megacaps, tech led the way on Wednesday — and most companies in the S&P 500 actually fell. Poor breadth has been a major concern of investors, especially among those wary of sky-high valuations and contentious AI stocks.
Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said there are signs that the U.S. stock market is overheating.
“Property prices are kind of inflated,” Dimon told CNBC. “You need good enough results to justify these prices.”
The S&P 500 rose 0.8%. The Nasdaq 100 climbed 1.6%. The Dow Jones Industrial Average added 0.2%. A Bloomberg gauge of “manifest seven” megacaps rose 1.7%. The Russell 2000 fell 0.6%.
The yield on the 10-year Treasury rose four basis points to 4.61%. The Bloomberg Dollar Spot Index fell.
Mark Hackett said, “Markets are reacting positively to the initial wave of Trump’s policies, with investors showing enthusiasm reminiscent of the run-up to the election as they anticipate tariff announcements. And breathe a sigh of relief at the early stages of the earnings season,” said Mark Hackett. Nationwide
Hackett also noted that while the bar for earnings is high, the market is showing impressive resilience.
“A breakout to fresh record highs will energize the bulls, as earnings seasons have been rough in recent quarters,” he concluded.
After the S&P 500 rose 24% in 2023 and 23% in 2024, the higher valuations prompted some discussion about whether the benchmark will be able to achieve such a performance again this year.
Back-to-back annual gains of more than 20% for the S&P 500 don’t necessarily make U.S. equities the cause of a pullback, as history shows the market continues to deliver solid, albeit more muted, returns over the next year. is,” said Jeff Schulz at Clearbridge Investments. “Furthermore, the current rally is the longest without a correction.”
Schulz also noted that earnings growth in recent years has been largely concentrated in a small group of stocks. This is expected to shift as earnings participation widens in 2025, leading to improved relative performance for small/mid caps and value laggards.
“While we continue to closely watch the new administration’s next moves, investors should not lose sight of the fundamentals that remain favorable for US equities,” said Solita Marcelli at 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.”
According to John Creekmer of Creekmoor Wealth Advisors, the stock market’s “January effect” is taking shape so far, with stocks performing strongly throughout the month.
“Investors are now more focused on earnings and less on expectations of tax cuts and deregulation from the new Trump administration, and concerns about lower Federal Reserve rate cuts this year,” he noted.
The Nasdaq 100 has nearly doubled since the start of 2023, adding $14 trillion in value in the process. Evercore ISI’s Rich Ross is poised to continue that rally, playing off fears of a familiar nemesis: bond yields.
Treasury rates hit multi-month highs last week as investors parsed economic data for clues on the Federal Reserve’s next interest rate cut. The yield on the US 10-year has pulled back after hitting a relative strength reading that usually signals a pullback. Add that to the positive technical signals and the Nasdaq 100 and S&P 500 indexes both look poised to hit fresh all-time highs in the first quarter, according to Ross.
“At the end of the day technology remains in an excellent position to propel this market forward,” said Ross.
Corporate Highlights:
Netflix Inc. after the streaming giant reported its biggest quarterly subscriber gain in history. shares rose, boosted by its first major live sporting events and the return of the Squid Game.
Salesforce Inc. Chief Executive Officer Marc Benioff said the current fiscal quarter will see “thousands” of deals for its new AgentForce AI product.
Alphabet Inc. Google has won a UK court ruling to prevent Russian media firms from seizing the tech giant’s global assets to recover fines imposed by a Russian court, which are now several times larger than the world economy combined. Interest has accrued.
United Airlines Holdings Inc. is expected to be solidly profitable in the first quarter as the carrier caters to strong demand during the winter months, a surprising turnaround from a generally sluggish travel period.
Procter & Gamble Co. Organic sales beat estimates at higher volumes, a shift from previous quarters where most of the company’s growth came from price increases.
Johnson & Johnson said a stronger dollar would cut into 2025 revenue and profit, pushing its forecast below analysts’ expectations and sending its shares lower.
Abbott Laboratories is forecasting lower-than-expected first-quarter revenue but full-year profit in line with Wall Street estimates as the health care company points to strong demand for its medical devices as a growth driver this year. is
Ali Financial Inc. Fourth-quarter earnings rose as its net interest margin beat analysts’ estimates and provisions for expenses and bad debt.
Highlights of this week:
Eurozone consumer confidence, Thursday
US jobless claims, Thursday
Bank of Japan policy meeting, Friday
Eurozone HCOB manufacturing and services PMI, Friday
US University of Michigan Consumer Sentiment, Current Household Sales, S&P Global Manufacturing and Services PMI, Friday
Some key moves in the markets:
Stock
The S&P 500 rose 0.8% as of 12:51 p.m. 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% to $1.0416
The British pound fell 0.2% to $1.2320
The Japanese yen fell 0.7% to 156.61 per dollar
Cryptocurrency
Bitcoin fell 2.2% to $104,426.78
Ether fell 1.5% to $3,283.7
bond
The yield on the 10-year Treasury rose four basis points to 4.61%.
Germany’s 10-year yield rose two basis points to 2.53%
Britain’s 10-year yield rose four basis points to 4.63%
objects
West Texas Intermediate crude rose 0.1% to $75.93 a barrel.
Spot gold rose 0.5% to $2,757.68 an ounce
This story was produced with assistance from Bloomberg Automation.
–With assistance from Cecil Gutscher, Sujata Rao, Robert Brand and Aya Wagatasuma.
