Market Overview

Today's session began with mixed activity but concluded positively due to an afternoon buying spree. Blue-chip companies led the way, maintaining strength throughout the session, while mega-cap stocks initially weighed down the S&P 500 (+0.5%) and Nasdaq Composite (+0.2%). The afternoon rally propelled the S&P 500 to a new record high, driven by a turnaround in stocks such as NVIDIA (NVDA), Amazon.com (AMZN), and Microsoft (MSFT).

Dow Jones Industrial Average Performance

The Dow Jones Industrial Average outperformed its peers, staying higher for most of the session. Gains in the price-weighted index were led by Goldman Sachs (GS), UnitedHealth (UNH), and Caterpillar (CAT). Other blue-chip stocks like GE Aerospace (GE) and Union Pacific (UNP) saw significant surges following encouraging earnings results and guidance, bolstering the S&P 500 industrial sector (+1.0%).

Treasuries and Economic Data

Calm activity in the Treasury market supported the afternoon rally. The 10-year yield increased by four basis points to 4.64%, while the 2-year yield decreased by two basis points to 4.28%. The market also absorbed the latest weekly jobless claims report, which indicated a larger rise in claims than expected, potentially favoring rate cuts by the FOMC.

Year-to-Date Performance

• S&P Midcap 400: +5.1% YTD
• Dow Jones Industrial Average: +4.8% YTD
• S&P 500: +4.0% YTD
• Nasdaq Composite: +3.9% YTD
• Russell 2000: +3.8% YTD

Economic Data Review

• Weekly Initial Claims: 223K (consensus 219K); Previous: 217K
• Weekly Continuing Claims: 1.899 million; Previous revised to 1.853 million from 1.859 million

The key takeaway is the elevated level of continuing jobless claims, indicating growing challenges in securing new employment after layoffs.

Weekly EIA Inventory Data

• Crude Oil Inventories: Draw of 1.02 million barrels; Previous draw of 1.96 million
• Natural Gas Inventories: Draw of 223 bcf; Previous draw of 258 bcf

Upcoming Economic Events

• 9:45 ET: Flash January S&P Global U.S. Manufacturing PMI (prior 49.4) and Services PMI (prior 56.8)
• 10:00 ET: December Existing Home Sales (consensus 4.21 million; prior 4.15 million) and Final January University of Michigan Consumer Sentiment (consensus 73.0; prior 74.0)

International Markets

• Europe: DAX +0.2%, FTSE +0.7%, CAC +0.2%
• Asia: Nikkei +1.0%, Hang Seng 0.0%, Shanghai +0.5%

Commodities

• Crude Oil: -0.88 @ 74.59
• Natural Gas: -0.04 @ 3.47
• Gold: -5.10 @ 2765.50
• Silver: -0.56 @ 30.87
• Copper: +0.03 @ 4.33

NVDA,AMZN,MSFT,GS,UNH,CAT,GE,UNP

Guru Stock Picks

Richard Pzena has made the following transactions:

• Reduce in AVT by 11%
• Add in JELD by 16.52%

Manning & Napier Group, LLC has made the following transactions:

• Reduce in RPRX by 39.31%
• Sold out in VTR
• Add in ESGD by 13.24%
• New position in DVN

Today's News

In a notable address at the World Economic Forum in Davos, President Donald Trump emphasized his intent to demand immediate interest rate cuts globally, although he did not directly name the Federal Reserve. This marks his first direct critique of the Fed since his re-election. The Federal Reserve is widely expected to maintain its current benchmark rate in the upcoming meeting. Trump's comments also included a call for Saudi Arabia and OPEC to lower oil prices, aiming to alleviate inflationary pressures as the U.S. reaches peak oil production.

Meanwhile, Intuitive Surgical (ISRG, Financial) reported strong fourth-quarter results with a significant earnings beat. The company anticipates continued growth in its da Vinci procedures, projecting a 13% to 16% increase in 2025. However, it foresees a slightly lower gross profit margin due to potential new tariffs, underscoring the impact of geopolitical factors on business operations.

In the tech sector, Perplexity launched its AI assistant on Android, enhancing its functionality to assist with daily tasks and internet searches. This move signifies the company's transition from a simple answer engine to a comprehensive AI assistant, reflecting the competitive landscape in AI technology.

Texas Instruments (TXN, Financial) shares fell following its first-quarter guidance that fell short of expectations, despite beating fourth-quarter earnings estimates. The company forecasts a lower-than-expected earnings range, with revenue projections aligning with estimates. Texas Instruments also anticipates a 12% effective tax rate.

President Trump also reiterated his commitment to tax cuts and tariffs aimed at boosting domestic production. His administration plans to pass substantial tax cuts for workers and manufacturers, continuing the economic policies initiated during his previous term. These moves are part of a broader strategy to stimulate the U.S. economy through fiscal measures.

In the energy sector, Lightbridge (LTBR, Financial) and Oklo (OKLO, Financial) announced a partnership to explore nuclear fuel recycling, highlighting the increasing focus on nuclear energy as a sustainable power source. This collaboration aims to address the growing energy demands driven by AI and cloud computing advancements.

Tempus AI (TEM, Financial) saw significant investment from Cathie Wood's Ark Invest, making it a major holding in the Ark Innovation ETF. This reflects the growing interest in healthcare technology and AI-driven solutions within the investment community.

Nikola (NKLA, Financial) faced a steep decline amid bankruptcy rumors and leadership changes. The company's silence on production updates and financial instability has raised concerns among investors, contributing to its stock's volatility.

Bitcoin (BTC-USD, Financial) experienced a price uptick following Trump's executive order to establish a crypto working group. This initiative aims to create a friendlier regulatory environment for digital assets, aligning with Trump's campaign promises to support the cryptocurrency sector.

GuruFocus Stock Analysis

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