Tech Stocks Lead Rally as Netflix Surges, Trump Boosts AI Expectations
The Nasdaq Composite (^IXIC) surged nearly 1.3% on Wednesday, driven by a jump in Netflix shares following strong earnings results. The S&P 500 (^GSPC) rose more than 0.6% to close just below its record high of 6,090.
President Donald Trump's initiative to invest $500 billion in private-sector artificial intelligence (AI) infrastructure, dubbed "Stargate," has fueled optimism in tech stocks. Oracle (ORCL), a partner in the venture, continued to climb, rising nearly 7% on the prospect of higher AI spending.
Despite heightened concerns about a Trump-led trade war, spirits remained high. On Tuesday, Trump announced he was considering imposing a 10% duty on China imports on February 1st. However, US stocks rallied on that day due to relief that China was not targeted in Trump's initial policy moves. Chinese stocks fell on Wednesday as the announcement rattled markets.
Corporate Earnings Continue to Roll In
Johnson & Johnson (JNJ) reported quarterly sales and profit above estimates, but its stock slipped as investors weighed the impact of the strong dollar. Shares of Procter & Gamble (PG) popped after its sales also beat forecasts.
Trump's Impact on Markets
Trump's policies and actions continue to have a significant impact on markets. On Tuesday, he held off from implementing universal tariff hikes, which boosted stocks. However, his announcement of the "Stargate" AI investment plan sparked a rally in tech stocks.
Gold Gains Amid Tariff Threats
Gold prices remained elevated as investors sought a safe haven amid Trump's tariff comments. On Wednesday afternoon, the precious metal was trading around $2,769, near levels last seen in October.
Tariff Talk: Trump Targets Canada
Trump's plan to impose 25% tariffs on Canada and Mexico has raised concerns among investors. The US-Mexico-Canada (USMCA) trade agreement is up for review in 2026, and experts believe the tariffs could complicate negotiations.
Higher Interest Rates May Be the New Normal
BlackRock's Investment Institute predicts that interest rates will remain above pre-pandemic levels. They argue that structural factors, such as aging labor forces and rising debt, will support higher inflation and interest rates.
Tech Rally Leads the Market Higher
The S&P 500 is pacing for a record close on Wednesday, led by a rally in the tech sector. Information Technology (XLK) and Communication Services (XLC) were the standout performers, rising over 2.3% and 1.4%, respectively. Netflix's 10% rally following strong earnings contributed to Communication Services' gains.
Johnson & Johnson Stock Down Despite Earnings Beat
J&J missed Wall Street expectations on fourth quarter and full-year 2024 results. Several negative factors were cited, including slowing COVID-19 vaccine sales.
Amazon Hits a Record High
Shares of Amazon (AMZN) rose nearly 2% on Wednesday, reaching over $234 per share, a new record high.
Trump Sparks an AI Revival
Trump's "Stargate" AI investment plan has ignited enthusiasm for AI-related stocks. Oracle, Nvidia (NVDA), and Super Micro Computer (SMCI) were among the top gainers.
Netflix Stock Reaches All-Time Highs
Netflix stock (NFLX) surged over 13% higher in early trading on Wednesday after reporting strong fourth quarter earnings. The company added a record 18.9 million users and exceeded revenue and earnings expectations.
S&P 500 Opens Near Record High
The Nasdaq Composite (^IXIC) rose nearly 1%, while the S&P 500 (^GSPC) climbed 0.5%. The Dow Jones Industrial Average (^DJI) was up 0.2%, coming close to its all-time intraday record high.