Stocks Surge as S&P 500 Reaches New Heights: How Technology and AI are Fueling the Market Boom

In today’s market update, stocks are on the rise. The S&P 500 has reached an all-time high, gaining over 4% since the recent Consumer Price Index (CPI) report. A drop in the 10-year Treasury yield has supported this rally, despite rates slightly increasing today to 4.6%. Meanwhile, the dollar has fallen to a two-week low, causing concerns for multinational companies. For instance, Johnson & Johnson expects a $1.7 billion hit on sales in 2025 due to currency issues. Procter & Gamble now anticipates a $300 million after-tax loss from unfavorable exchange rates. Abbott Labs noted their quarter would have been much stronger without the impact of the strong dollar, but they’re still seeing solid growth, with expectations for a 7.5% to 8.5% rise in 2025.

In sector news, technology and AI are making headlines after OpenAI, Oracle, and Softbank pooled together $100 billion to back AI infrastructure via a joint venture named Stargate. This signals strong ongoing investment in AI, which is set to grow over the coming years. The communication services sector is also performing well, led by Netflix, with Meta and Alphabet also showing gains. Consumer discretionary slightly improved thanks to Amazon, while auto supplier Aptiv soared after announcing plans to split its electrical distribution and software businesses.

Elsewhere, utilities and real estate sectors are struggling, mainly due to rising Treasury yields. Banks are taking a breather following strong earnings last week. Energy stocks are mostly down, except for Coterra Energy, which is performing well. The oil services sector faced losses after Halliburton’s results suggested a quieter 2025 for North America. Industrials are mixed, but companies involved in electrification, like Eaton and GE Vernova, have seen positive movement, potentially boosted by Stargate’s investments. Amphenol, a specialist in electrical equipment, reported strong demand from AI and gave optimistic guidance for the first quarter.

Looking ahead, we’ll see quarterly results from Kinder Morgan, Alcoa, and SL Green after the market closes today. Tomorrow morning is busy as GE Aerospace, American Airlines, Freeport-McMoRan, Elevance Health, Union Pacific, and McCormick are all set to report. Plus, we’ll have our January Monthly Meeting at noon.

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