Trump's $500 Billion AI Initiative Sparks Tech Rally and Market Optimism

Nasdaq 100: AI Optimism-Fueled Rally Could Put New All-Time High in Sight | Investing.com UK

Kick off the new year with a portfolio built for volatility and undervalued gems - subscribe now during our New Year's Sale and get up to 50% off on InvestingPro! While US futures were trading in the negative in early London trade, European stock averages were all in the black, suggesting that sentiment remains upbeat. Technology stocks have been riding a wave of enthusiasm around artificial intelligence and robust earnings reports from corporate giants. The S&P 500 has outshone its peers, fuelled by President Trump's announcement of a $500 billion investment in AI infrastructure, sending the index to a new all-time high yesterday. The Stargate project, a collaboration with OpenAI, Oracle (NYSE:ORCL), and Softbank (OTC:SFTBY), has captured investor imagination, focusing attention on growth and productivity gains. For now, valuation and debt concerns have been put to the back burner. Trump's decision to boost AI spending lifted megacap tech stocks midweek, even as his protectionist trade rhetoric continues to cast a shadow on some sectors of the global markets. While he has refrained from imposing universal tariffs, the threat of levies on Europe and China still lingers, tempering some of the market's optimism. However, judging by how the markets have behaved this week, we could see new all-time highs in the Nasdaq 100 soon, despite these concerns. So, US index futures may have dipped into the red but the familiar "buy-the-dip" mentality could push markets higher by the close. Investors are sifting through Trump's comments on potential tariffs targeting Mexico, Canada, Europe, and China. His remarks on Europe's trade surplus with the US and the possibility of a 10% tariff on Chinese goods have stoked concerns, though this figure remains far below the 60% he touted during his campaign. For now, markets are focused on the balance between growth initiatives, like AI investments, and the looming risks of protectionist policies. Trump's measured approach to tariffs has provided some breathing room. Today, traders will keep an eye on weekly US jobless claims data and President Trump's address at the World Economic Forum in Davos. Fourth-quarter earnings from General Electric (NYSE:GE), American Airlines (NASDAQ:AAL), and Texas Instruments (NASDAQ:TXN) are also expected to draw attention. With the US economic calendar otherwise quiet, markets will likely remain fixated on Trump's protectionist plans and any hints of inflationary pressures, particularly as the Federal Reserve gears up for next week's policy meeting, where rates are expected to hold steady. It is also worth keeping an eye on Netflix (NASDAQ:NFLX) and Oracle, following their strong results. Yesterday saw a standout performance from Netflix, whose shares surged after the streaming giant smashed Q4 expectations. With 19 million new subscribers pushing the total past 300 million, Netflix reported EPS of $4.27 on $10.25 billion in revenue, beating forecasts of $4.20 on $10.11 billion. Strong content, improved product offerings, and seasonal demand drove the impressive growth. Oracle also enjoyed a strong day, buoyed by its inclusion in Trump's ambitious AI investment plan. Shares climbed further, adding to a week of robust gains for the software giant. While both stocks fell from their highs, dip-buyers could step in to keep the momentum going for these stocks. From a purely technical point of view, the trend remains bullish on the Nasdaq, as you can see on this daily futures chart. Following Trump's inauguration speech, the index broke out of a falling wedge continuation pattern to the upside. It rose above the 21-day exponential moving average and broke a few resistance levels, including 21,500 and more recently 21,800. While the futures point to a weaker start to today's session, the dip can be bought given that the trend is quite strong. And so those broken resistance levels at 21,800 and 21,500 are the key support levels to watch for a potential buy-the-dip trade. In terms of resistance levels to watch, 22,090 is an interesting level, marking the high from yesterday. It was also a high from the last week of December. A potential break above that area could pave the way for the December's all time high at 22,425, which is the main bullish target for the falling wedge breakout traders. At this stage, I wouldn't entertain the idea of shorting this index until and unless we see a bearish reversal formation. *** How are the world's top investors positioning their portfolios for next year? Don't miss out on the New Year's offer -- your final chance to secure InvestingPro at a 50% discount. Get exclusive access to elite investment strategies, over 100 AI-driven stock recommendations monthly, and the powerful Pro screener that helped identify these high-potential stocks.

The rise of oligarchy?

The anticipated drama surrounding Donald Trump's inauguration has eased, despite the 47th President of the United States making some bold announcements recently. If the VIX volatility index is a reliable barometer of investor anxiety, it seems investors have found some comfort over the past 48 hours, as the index has settled back to its late-December levels. U.S. equity futures experienced an upward trend on Wednesday, primarily driven by the tech-heavy Nasdaq. This rise was influenced by several factors, including President Donald Trump's announcement of a $500 billion "Stargate" initiative aimed at enhancing U.S. artificial intelligence (AI) capabilities. This initiative involves major companies such as Microsoft-backed OpenAI, Oracle, and SoftBank. As a result, Oracle's shares increased by 9%, while other tech companies like Microsoft and Nvidia also saw gains. The goal is clear: to establish the United States as the epicenter of global AI Netflix significantly contributed to the Nasdaq's rise, with its shares jumping 14.9% in premarket trading. The streaming giant reported a record number of subscribers in the holiday quarter, allowing it to raise prices for most service plans. This positive performance also boosted other streaming companies. Globally, markets in China and Hong Kong declined after President Trump reiterated a threat to impose an additional 10% tariff on Chinese goods. This announcement also affected the broader market sentiment, with concerns about potential trade wars and inflation pressures. President Trump is also pushing for an early renegotiation of the U.S. trade deal with Canada and Mexico, using the threat of tariffs as leverage. In the short term, the financial markets appear unfazed by the unfolding political landscape. Most Western stock indices climbed yesterday, with the S&P 500 nearing its record high from December 6, 2024. Meanwhile, Apple continued its downward trajectory, shedding 3.2% and extending its one-month decline to 12.5%. As a result, Apple has once again ceded its title as the world's largest company by market capitalization to Nvidia. Tech moguls are often seen as omnipotent, yet even they seem to regard Donald Trump as the ultimate power broker. Despite differing views, many tech leaders have pledged their allegiance to the new President, eager to be in his good graces at the inauguration. Trump also reminded us that he hasn't forgotten about China and Europe when it comes to tariffs, though his approach is less aggressive than towards Mexico and Canada. As expected, the dawn of 2025 heralds a transformation of the United States under Trump, and consequently, a reshaping of the world. For decades, when the United States speaks, others listen. This dynamic will have significant repercussions in the coming months and years. Even as the rest of the world attempts to regain control, the U.S.'s technological leadership and its ability to mobilize vast investments give it a substantial advantage. Wall Street's ability to attract global savings is another key asset. This "America First" policy, or rather "All for America, regardless of the rest of the world," is not without risks -- economic, geopolitical, societal -- but in the short term, it's a formidable force. So, what are the world's top fund managers doing about it? That's the focus of Bank of America's monthly survey, which landed on my desk yesterday. Frankly, the U.S. bank could have skipped January's edition, as the results are as predictable as rain in Brittany. Drum roll... Professionals are buying dollars, stocks, and bitcoins while selling almost everything else. That's a bit of an oversimplification, as there are some intriguing nuances. For instance, managers have increased their bets on Europe at the expense of the United States, albeit modestly. Specifically, they've shifted to a symbolic overweight in Europe, having been 22% underweight the previous month (quick explanation: overweight and underweight refer to positions more or less exposed to the index average. For example, if Europe makes up 14% of global indices and managers are 11% exposed to Europe, they're 3% underweight, indicating they believe other regions will perform better). Simultaneously, managers have reduced their overweight in U.S. equities from 36% to 19%. I'm being a tad dramatic: the shift is still one of the most significant in the past 25 years. Whether it will endure is another question. And here's the burning question: what keeps the anxious investor up at night? The fear that inflation will compel the Fed to hike rates. The nightmare scenario? A sudden spike in bond yields wiping out equities. The safe haven? Staying long on the magnificent seven (as has been the case for 22 consecutive months). The favored index? The Nasdaq, once again, while the Russell 2000 has rapidly dwindled. In the Asia-Pacific region this morning, markets are caught between renewed enthusiasm for artificial intelligence, boosting semiconductor stocks, and the looming threat of tariffs on China, even though Trump's proposed 10% figure is below economists' median expectations (closer to 20%). Japan rebounded 1.5% despite the prospect of a rate hike by the Bank of Japan on Friday. China fell 1% on the mainland and 1.6% in Hong Kong. South Korea and Taiwan, with their substantial tech sectors, gained 1%. The situation is more complex in India, where the SENSEX limited its gains to 0.2%. Australia rose 0.3%. In Europe, indices are bullish, with the Stoxx Europe 600 up 07%.

Trump switches to AI as tariffs lurk, Netflix soars

A look at the day ahead in U.S. and global markets from Mike Dolan Retaining a persistent, if uncertain, threat of new tariffs, U.S. President Donald Trump quickly switched his attention to technology and artificial intelligence this week - exciting the red-hot sector that's about to report its latest earnings round. Trump on Tuesday announced a private sector investment of up to $500 billion to fund infrastructure for artificial intelligence, aiming to outpace rival nations in the business-critical technology. The newly sworn-in President said ChatGPT creator OpenAI, SoftBank and Oracle plan a joint venture called Stargate, which he said will build data centers and create more than 100,000 jobs in the United States. Softbank shares soared more than 10% in Tokyo trading, while Oracle surged 9% out of hours ahead of Wednesday's bell. With the fizz back in tech, streaming giant Netflix burst 14% higher in premarket trade on Wednesday after its latest earnings update revealed a record 18.9 million new subscribers over the holiday quarter and plans for price hikes. The renewed tech focus comes as the Nasdaq has marginally underperformed the broader S&P500 so far this year, with even Apple under a cloud on Tuesday despite brisk Wall Street stock index gains. The Apple retreat allowed AI-chip darling Nvidia to retake top spot as America's most valuable company. With some big industrial names topping the corporate diary on Wednesday, and the first 10% of S&P500 firms pointing to overall annual profit growth of almost 11% through the last quarter, stock futures were up smartly before the open. The S&P500 closed above the 6,000 mark on Tuesday for the first time this year - less than 1% from record highs. Despite the AI tilt, Trump continued to rattle the tariff sabre overnight - without necessarily giving much additional clarity on where exactly or when they may be coming. Trump vowed to hit the "very, very bad" European Union with tariffs and said his administration was also discussing a 10% punitive duty on Chinese imports - blaming the trafficking of fentanyl from China to the U.S. via Mexico and Canada. Currency gyrations around the threats seemed to have calmed down, however, with traders adopting a 'wait and see' mode and assuming any moves will happen only after the countries in question respond to Trump's main concerns. The dollar index slipped to its lowest in two weeks, with the euro clocking its best levels of the year so far - even as European Central Bank officials speaking in Davos lined up behind more interest rate cuts this year. Even though exchange rate swings have seemed large this week, implied currency volatility gauges have actually subsided. Three-month dollar/yen 'vol' fell to its lowest since July on Wednesday with the Bank of Japan's latest interest rate hike now seen to be baked in. Equivalent euro vol measures are the lowest since November, and even sterling measures have returned to two-week lows. European shares brushed off Trump's trade threats too, with the STOXX600 index hitting a record high on Wednesday. Addidas helped Germany's DAX to a new record too and the sportswear brand jumped 6% after its latest results. The near 6% gain in benchmark euro zone stock indexes this year is twice that of the S&P500 in dollar terms - with Bank of America's latest global fund manager claiming allocations to European stocks this month were their second largest allocation in a quarter of a century. Chinese stocks were less enthusiastic about being back in the tariff firing line, however, and fell back about 1% on Wednesday - the yuan slipping too. Despite the pre-inauguration phone call between Trump and Chinese President XI Jinping last week, Trump appears to be emboldened enough to publicly resume the trade war he started in his first term. Back in fixed income markets, the jittery start to the new year seems to have calmed considerably. A combination of lower oil prices - due in part to Trump's plans to increase domestic drilling - and the lack of immediate tariff hikes has helped to cosset Treasury yields back at levels seen at the turn of the year. After significant relief from U.S. inflation data last week, Canada underlined the optimism on consumer prices on Tuesday with an unexpectedly large drop in monthly prices that kept annual inflation below the Bank of Canada's 2% target last month. Elsewhere, recently agitated British gilts also outperformed this week as news of a big drop in UK hiring and robust auction demand for the bonds offset higher public borrowing numbers and pulled yields back to where they were at the start of the year. Key developments that should provide more direction to U.S. markets later on Tuesday: * Canada December producer price inflation * US corporate earnings: Halliburton, Procter & Gamble, Johnson & Johnson, Discover Financial, Kinder Morgan, Steel Dynamics, Abbott Laboratories, Travelers, Amphenol, Ge Vernova, TE Connectivity, Textron, Teledyne * World Economic Forum in Davos, including European Central Bank President Christine Lagarde, Bundesbank President Joachim Nagel, Bank of France chief Francois Villeroy de Galhau, Dutch central bank boss Klaas Knot and European Union commissioner Valdis Dombrovskis * German Chancellor Olaf Scholz meets French President Emmanuel Macron in Paris (By Mike Dolan, editing by William Maclean; mike.dolan@thomsonreuters.com)

Wall Street: close to record highs thanks to AI

Wall Street returned close to its all-time highs on Wednesday, buoyed by the strong performance of technology stocks in a climate of widespread optimism following the presentation of a gigantic AI investment plan. In late morning trading, the Dow Jones index advanced 0.1% to 44,080.8 points, while the Nasdaq Composite gained a more marked 1.2% to 20,011.3 points.011.3 points. With a gain of almost 0.7% to 6089.3 points, the S&P 500 is back within touching distance of last month's peak of over 6099.9 points. The trend is supported by Donald Trump's announcement yesterday of a $500 billion AI investment plan to bolster already robust economic growth. On the stock front, technology heavyweights such as Oracle (+7%), Palantir (+3.5%) and Microsoft (+3%) were among the main contributors to another session of gains. AI chipmaker Nvidia posted a 3.6% gain, consolidating its position as the world's largest market capitalization, with a valuation of $3,570 billion.570 billion. The project, dubbed 'Stargate', calls for the construction of 20 new data centers in the USA over the next few years. 'This alleviates some of the concerns of investors, who feared that demand for AI had peaked', comments a New York-based analyst. It also improves visibility on Nvidia's growth beyond fiscal 2026", he explains. On the earnings front, the latest releases are receiving a mixed reception from investors. Netflix soars by 11% after last night reporting a record quarter in terms of subscribers and announcing its intention to raise prices again. On the Dow, Procter & Gamble gained nearly 3% after announcing better-than-expected quarterly results and sales. Conversely, the healthcare group Johnson & Johnson gave up 2.8% in the wake of a 2025 outlook deemed a little tight. On the fixed-income market, yields on US Treasury bonds are recovering slightly following their recent downturn, with the 10-year bond back towards 4.60%. A victim of profit-taking after peaking above $80 last week, a barrel of Texas light crude (WTI) continues to consolidate, shedding 0.2% around $75.6. The dollar's recent weakness and the uncertainty surrounding the implementation of new US tariffs are supporting gold, which has reached its highest level since last October. US gold futures are currently up 0.4% at $2,770.4 an ounce. Copyright (c) 2025 CercleFinance.com. All rights reserved.

Nasdaq futures lead gains after Netflix results, Trump's AI investment plans

(Reuters) - U.S. stock index futures rose on Wednesday, with those tied to the tech-heavy Nasdaq in the lead as investors cheered streaming giant Netflix's strong quarterly performance and President Donald Trump's multi-billion show of support for the AI technology industry. At 5:31 a.m. ET, Dow E-minis were up 57 points, or 0.13%, S&P 500 E-minis were up 26 points, or 0.43% and Nasdaq 100 E-minis were up 177.75 points, or 0.82%. Netflix jumped 14.3% in premarket trading after reporting a record number of subscribers over the holiday quarter, enabling it to increase prices for most service plans. Other streaming firms such as Roku and Walt Disney added 1.3% and 4.2%, respectively. "Stellar subscriber figures such as these would be hard to beat. Netflix is seen as a litmus test for the entire tech sector ... the tech sector could be well placed to report strong earnings figures in the coming months," said Kathleen Brooks, research director at XTB. Also among top movers, Oracle gained 7.8%, a day after Trump said the company would make a $500 billion investment in AI infrastructure with OpenAI and SoftBank - a joint venture called Stargate. Although, there was no clarity on funding. Server makers including Dell and Super Micro added 3.5% and 3% respectively, while AI bellwethers Microsoft added 1.5% and Nvidia rose 2.8%. "The news also boosted growth and productivity expectations more than they fueled the ballooning debt worries," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. Data pointing to a strong economy as underlying inflation cools, and Trump's moderate approach to tariffs have aided risk taking on Wall Street since last week, with the benchmark S&P 500 less than 1% away from all-time highs. Easing Treasury yields have also encouraged risk taking in stocks. However, Trump has warned that tariffs on imports from China, Mexico, Canada and the European Union could be issued on Feb. 1, a reminder for markets that risks of a potential trade war and fresh inflation pressures still prevailed. Traders expect the Federal Reserve to leave interest rates unchanged when it meets next week and expect the central bank to deliver its first rate cut this year in July, according to data compiled by LSEG. Among other movers, United Airlines advanced 3.6% after forecasting a stronger-than-expected profit in the current quarter, betting on robust travel demand and improved pricing power. Johnson & Johnson, Procter & Gamble, Abbott Halliburton are among those that are expected to report quarterly earnings before markets open. (Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Maju Samuel)

Wall Street: wind of optimism with Trump's AI plan

The New York Stock Exchange is set to open slightly higher on Wednesday, despite the mixed reception of quarterly results from market heavyweights such as Netflix and Johnson & Johnson, more than offset by the presentation of a gigantic investment plan dedicated to AI. Around 30 minutes before the opening, futures on New York's main indices were up between 0.3% and 1%, suggesting a continuation of the previous day's upward movement. Quarterly publications have accelerated sharply in recent hours, with 43 S&P 500 and six Dow Jones companies due to publish their accounts this week. Among the Dow components, Procter & Gamble gained more than 3% in pre-opening trading after announcing better-than-expected quarterly earnings and sales. Conversely, healthcare group Johnson & Johnson lost more than 2% in pre-opening trading in the wake of a 2025 outlook that was deemed to be a little tight. In the technology sector, Netflix is expected to jump 14% at the opening after reporting a record quarter in terms of subscribers last night, and expressing its intention to raise prices again. The market trend continues to be dictated by political news, following the presentation last night by new President Donald Trump of an ambitious investment plan in AI. The project, dubbed 'Stargate', which also involves Softbank, Oracle and OpenAI, could reach $500 billion over the next four years. These new expenditures, which come on top of the budgets already released by Microsoft, Amazon and Google in the field, should reinforce the sector's good health and breathe new life into the economy. On the currency markets, the dollar continued its decline against the euro, which managed to hover above the 1.04 threshold against the greenback, at around 1.0435. Yields on US Treasury bonds continued to fall, with the 10-year bond dipping to 4.57%. A victim of profit-taking after peaking above $80 last week, a barrel of Texas light crude (WTI) is trying to stabilize in the $75.8 zone. Copyright (c) 2025 CercleFinance.com. All rights reserved.

Wall Street: solid rise, Netflix soars, Nvidia is No.1

A good recovery session on the New York Stock Exchange (closed on Monday due to Martin Luther King Day): US indices close sharply higher (after a cautious start) and the Dow Jones (+1.24%) returns to the 44,000 mark, its best since December 12. S&P500 gains 0.9% (with 85% of shares up), Nasdaq only +0.65%... but still up +0.7% in the 'after hour'. Indeed, Netflix, which published its results this evening, soared +13% (new record at $985, well above the $942 of 12/11/2024) and its capitalization leapt above $400 billion. In his inaugural speech, Donald Trump declared a "state of energy emergency" and promised, unsurprisingly, to put America and its reindustrialization first, but he remained vague about the introduction of new tariffs (25% applied against Canada and Mexico on February 1?).). This evening's announcement of massive investments in AI led to a rush on semiconductor stocks: ARM soared +4%, Micron climbed +3.5%, Nvidia +2.3%... which regained its position as the world's largest capitalization ($3,445 billion) at the expense of Apple, down again (-3.2% and $3,348 billion in 'capi'). Equity investors are filling up, as the promised tax cuts and deregulation policies should boost corporate profits", says Bruno Lamoral, portfolio manager at DPAM. "Investors have remembered that his first presidency was marked by high volatility in financial assets, but above all by a 68% rise in the S&P 500", points out Christopher Dembik, investment strategy advisor at Pictet AM. On the oil market, WTI per barrel is down 2% below $76 on the NYMEX: the so-called 'state of energy emergency' means more oil production, and therefore potentially lower prices in the long term. Copyright (c) 2025 CercleFinance.com. All rights reserved.