U.S. stocks continued their upward momentum on Wednesday, with major indexes reaching new highs, bolstered by strong performances from AI-related companies. The S&P 500 gained 0.6%, closing just 4 points shy of its record-high closing level, while the Nasdaq Composite surged 1.3%, inching closer to a record high. The Dow Jones Industrial Average also added 0.3%, marking its third consecutive day of solid gains.
The rally was fueled by a combination of strong earnings reports across multiple sectors and initial actions taken by President Donald Trump in his early days in office. Investors reacted positively to these factors, driving market sentiment higher.
AI Stocks Lead the Charge
AI-related stocks were among the biggest winners of the day, with notable moves from companies tied to the booming sector. Netflix (NFLX) saw a significant surge, rising nearly 10%, after reporting better-than-expected earnings and raising its revenue forecast due to a spike in subscriber numbers. Oracle (ORCL) also gained 6.8%, building on the previous day’s 7% increase, following Trump’s announcement that the software giant would collaborate with Microsoft-backed OpenAI and Japan’s SoftBank on a $500 billion AI infrastructure project.
Mega-cap tech stocks were mostly in the green, driven by enthusiasm around AI. Chipmaker Nvidia (NVDA) and Microsoft (MSFT) each rose more than 4%, while Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), Meta Platforms (META), and Broadcom (AVGO) all saw gains. Tesla (TSLA), however, bucked the trend, falling 2.1%.
Other companies riding the AI wave included Arm Holdings (ARM), which soared 16%, and Monolithic Power Systems (MPWR), a supplier to Nvidia, which added 8%. Arista Networks (ANET) gained nearly 7%, while software firms Palantir (PLTR) and AppLovin (APP) advanced 5% and 7%, respectively. Both companies have been among the top performers of 2024.
Strong Earnings Across Sectors
Other stocks gained on the back of strong earnings reports. Insurer Travelers (TRV) rose 3.1%, while consumer goods giant Procter & Gamble (PG) and energy company GE Vernova (GEV) gained 1.9% and 2.7%, respectively. However, Johnson & Johnson (JNJ) saw a nearly 2% drop, as its sales outlook for the coming year came in weaker than analysts had anticipated.
Bitcoin Surges Amid Inauguration Hopes
Bitcoin remained volatile, trading at $104,000 after briefly reaching a high of $107,000 earlier in the day. The cryptocurrency has seen a sharp increase of nearly 50% since the presidential election, driven by investor optimism that the new administration will take steps to support the digital currency market. Bitcoin hit a record above $109,000 on Monday ahead of President Trump’s inauguration.
Bond Yields and Commodities
The yield on the 10-year Treasury rose to 4.61%, up from 4.57% the previous day. This uptick reflects market expectations for interest rate movements. Last week, yields dropped following stronger-than-expected inflation data, which fueled hopes that the Federal Reserve might consider rate cuts in the near future.
In commodities, gold futures were up 0.3%, trading around $2,765 an ounce, while WTI crude oil futures dipped 0.5%, reflecting some pullback after recent gains.
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