Market Overview

This week marked a historic moment as Donald J. Trump was inaugurated as the 47th President of the United States. His inauguration coincided with Martin Luther King, Jr. Day, resulting in a market holiday. When trading resumed on Tuesday, the markets quickly regained momentum, bolstered by President Trump's declaration of a national energy emergency and a series of executive orders that notably did not include tariffs on China. However, there was a suggestion of potential 25% tariffs on Canada and Mexico starting February 1.

The absence of harsh tariffs on China contributed to a relief rally, further fueled by a $500 billion AI infrastructure initiative involving OpenAI, Softbank, and Oracle (ORCL, Financial). On Wednesday, the market continued its upward trend as Netflix (NFLX, Financial) impressed with its earnings report, and Dow components Procter & Gamble (PG, Financial) and Travelers (TRV, Financial) provided further earnings-related support. The S&P 500 reached a new all-time high, followed by a record closing high on Thursday.

Presidential Influence and Economic Indicators

President Trump's virtual address to the World Economic Forum in Davos highlighted his intention to pressure OPEC and Saudi Arabia to lower oil prices and his expectation for NATO countries to spend 5% of their GDP on defense. He also indicated that foreign companies manufacturing in the U.S. would benefit from lower tax rates, while others might face tariffs. Additionally, he expressed a desire for lower interest rates, which was seen as a subtle critique of Fed Chair Powell ahead of the FOMC meeting on January 28-29.

The FOMC meeting, along with upcoming earnings reports from major companies like Apple (AAPL, Financial), Microsoft (MSFT, Financial), Meta Platforms (META, Financial), Amazon.com (AMZN, Financial), and Tesla (TSLA, Financial), will be focal points next week. Although no rate cut is expected, President Trump's comments on interest rates have heightened interest in the meeting.

Sector Performance and Market Sentiment

Overall, the market performed well, with major indices gaining between 1.1% and 2.2%. Ten out of the 11 S&P 500 sectors saw gains, with communication services leading at 4.0%. The energy sector was the exception, declining by 2.9% due to concerns over potential supply-demand imbalances following increased oil and gas production.

The Treasury market remained stable, supporting stocks. The 2-year note yield was unchanged at 4.27%, while the 10-year note yield rose slightly to 4.63%. The U.S. Dollar Index fell by 1.7% to 107.47.

Daily Market Movements

Tuesday

Tuesday marked President Trump's first official day in office, and the stock market responded positively. The absence of tariff actions against China was a relief, although potential tariffs on Canada and Mexico were noted. The Treasury market's calm response, with the 10-year note yield dropping to 4.57%, supported stocks. Notably, 3M (MMM, Financial) reported better-than-expected earnings, and Oracle (ORCL, Financial) was involved in a significant AI infrastructure initiative.

Wednesday

The market experienced some selling pressure, but the S&P 500 still reached a new all-time high. Mega caps and chipmakers, particularly those involved in AI initiatives, drove gains. Netflix (NFLX, Financial) was a standout performer with strong subscriber growth, while Procter & Gamble (PG, Financial) and Travelers (TRV, Financial) also reported strong earnings.

Thursday

Thursday saw mixed action but ended positively thanks to afternoon buying, particularly in blue-chip stocks. The S&P 500 reached another record high, with notable contributions from NVIDIA (NVDA, Financial), Amazon.com (AMZN, Financial), and Microsoft (MSFT, Financial). The Dow Jones Industrial Average outperformed, supported by earnings from companies like Goldman Sachs (GS) and UnitedHealth (UNH, Financial).

Friday

Friday's session saw modest losses, following gains earlier in the week. The focus was on upcoming earnings reports from major tech companies. Meta Platforms (META, Financial) announced a significant capex plan for AI initiatives, while Texas Instruments (TXN, Financial) and Boeing (BA) provided disappointing guidance. The market also digested economic data, including a weaker consumer sentiment reading and a deceleration in the services PMI.

Guru Stock Picks

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• Reduce in VTRS by 0.12%
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Today's News

MicroStrategy (MSTR, Financial) could face a significant tax bill due to a 15% tax on unrealized gains from its $47 billion Bitcoin holdings. This tax, introduced by the Inflation Reduction Act of 2022, may impact the company's financials starting in 2026. The tax is based on new accounting standards that require the fair market value of Bitcoin to be included in GAAP earnings.

Meta Platforms (META, Financial) is planning a major investment in artificial intelligence infrastructure, with CEO Mark Zuckerberg announcing a $60 billion to $65 billion expenditure. The company aims to build a data center with over 1GW of computing power this year and expects to have more than 1.3 million GPUs by 2025. This expansion supports Meta's AI initiatives, including the Llama 4 model.

Palantir Technologies (PLTR, Financial) has seen its stock rise for eight consecutive sessions, closing at $79.04 on Friday. The stock has gained over 300% in the past year, with recent positive analyst coverage from Wedbush, which raised the price target to $90. The company's AI strategy is a key factor in its growth outlook.

Novo Nordisk (NVO, Financial) faced criticism from the U.K.'s Prescription Medicines Code of Practice Authority for misreporting payments related to healthcare sponsorships. The company, known for its weight-loss drug Wegovy, was found to have mischaracterized nearly $977,000 in payments from 2015 to 2022.

Texas Instruments (TXN, Financial) experienced a 7.5% drop after issuing cautious guidance for the first quarter. The semiconductor company's performance contributed to a broader slump in the Information Technology sector.

Shares of Iridium Communications (IRDM, Financial) rose nearly 6% after Cantor initiated coverage with an Overweight rating, citing improvements in Space equities sentiment. The brokerage sees potential growth in cash flow and competitive positioning for Iridium.

Cloudflare (NET, Financial) continued its upward trend, closing 1% higher at $125.20. The stock has gained over 50% in the past year, with analysts maintaining a positive outlook due to the company's growth potential.

Paramount Global (PARA, Financial) saw a 1.2% rise after reports of a competing offer for the company from Project Rise. The offer includes a 27% premium for Class B shares compared to the Skydance deal, with a total value of $13.5 billion.

Nvidia (NVDA, Financial) saw a slight dip in its stock despite Meta's announcement of a massive AI data center plan. The company remains a key supplier of GPUs to Meta, alongside AMD (AMD), which remained flat following the news.

NextEra Energy (NEE, Financial) topped the S&P 500 leaderboard with a 5.1% gain, despite flat Q4 earnings. The company announced partnerships and regulatory plans, including restarting a nuclear plant in Iowa.

SoFi Technologies (SOFI, Financial) is set to announce Q4 earnings, with investors focusing on loan growth and the financial services segment. The company is expected to report a modest increase in its Loan Platform business.

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