Stock Market Extends Record Highs, S&P 500 Hits 4,900 On Tech Rally, Microsoft's $3 Trillion Mark: What's Driving Markets Wednesday?

It’s a bullish day on Wall Street, with major U.S. large-cap indices reaching record highs, driven by broad-based rallies in tech-related stocks as investors continue to embrace the AI trade.

The U.S. government announced on Wednesday the National Science Foundation, in collaboration with prominent tech companies specializing in artificial intelligence (AI) and nine other federal agencies, is launching a pilot program designed to establish a shared AI research infrastructure.

The S&P 500 Index surged past 4,900 points, maintaining its upward trajectory for the fifth consecutive session. This index, comprising 500 of the largest U.S. stocks, has achieved a remarkable 17% return over the past three months, marking its most robust three-month rally since June 2020 and the second most vigorous since May 2009.

Microsoft Corp. MSFT attained a significant milestone, reaching a $3 trillion market capitalization and matching Apple Inc. AAPL as the world’s most valuable company. Microsoft holds the highest weight in the S&P 500 index, with a 7.3% stake.

The Nasdaq 100 also experienced remarkable growth, surpassing 17,660 points. The tech-heavy index is on track for its 11th gain in the last 13 sessions, and potentially its 12th positive week in the last 13.

The Dow Jones Industrial Average inched 0.3% up, while the Russell 2000, which is tied to small-cap stocks, lagged, screening a flat performance.

On the data front, U.S. private sector activity surveys for January indicated the strongest growth in the past seven months, led by a robust performance in the service sector and signs of recovery in manufacturing. Investors now await advance estimates of the fourth quarter U.S. GDP, scheduled for Thursday.

Elsewhere, the People’s Bank of China (PBoC) cut the Reserve Requirement Ratio (RRR) for banks by 50 basis points. This move is anticipated to inject approximately $139.45 billion into the market, complementing other stimulus measures recently introduced by Beijing. Chinese-related stocks, as gauged by the iShares China Large-Cap ETF FXI, responded positively, with a 3% increase following a 4.5% rally the previous day.

In currency and commodities markets, the U.S. dollar weakened slightly, gold prices dipped by 0.5%, and oil prices climbed by 1%. Meanwhile, Bitcoin BTC/USD edged up by 0.5%, nearing the $40,000 mark.

Wednesday's Performance In U.S. Major Indices, ETFs

The SPDR S&P 500 ETF Trust SPY rose 0.7% to $487.91, the SPDR Dow Jones Industrial Average DIA edged 0.2% higher to $379.76 and the tech-heavy Invesco QQQ Trust QQQ was 1.3% higher to $428.82, according to Benzinga Pro data.

Sector-wise, the Technology Select Sector Fund XLK outperformed, up 1.4%. The Utilities Select Sector Fund XLU underperformed, down 1.3%.

Among industries, chipmakers dominated, with the VanEck Semiconductor ETF SMH up 2.8%.

Wednesday’s Stock Movers

• Netflix, Inc. NFLX rose over 12% in reaction to the company's earnings report. The streaming giant reported subscriber additions of 13.1 million in the fourth quarter.
• Other companies reacting to their earnings were Textron Inc. TXT, up 8%, Abbot Laboratories ABT, down 2.7%, Texas Instrument Inc. TXN, down 2.2%, AT&T Inc. T, down 3%, Freeport-McMoRan Inc. FCX, up 5%, General Dynamics Corp GD, up 5%, and Kimberly-Clark Corporation KMB, down 5%.
• DuPont De Nemours Inc DD tumbled over 13% after the company expected to witness a loss for the fourth quarter, considerably below analyst target. Wells Fargo cut the stock from Overweight to Equal-weight.
• Major companies expected to report after market close include Tesla Inc. TSLA, Canadian Pacific Kansas City Limited CP, Ameriprise Financial, Inc. AMP, International Business Machines Corp. IBM, CSX Corp. CSX, Knight-Swift Transportation Holdings Inc. KNX, Lam Research Corporation LRCX,  Las Vegas Sand Corp. LVS and Seagate Technology Holdings plc STX.

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