US markets soared on Wednesday, with the S&P 500 reaching a new all-time high, lifted by stellar earnings from Netflix and a surge in artificial intelligence-related stocks. The Nasdaq led the rally, powered by significant gains in tech heavyweights like Nvidia, Oracle, and Microsoft, as investors embraced the transformative potential of AI. Strong corporate earnings, particularly in the technology sector, and easing inflation further boosted investor sentiment, helping major indices maintain their upward trajectory.

Key Takeaways:

  • S&P 500 Hits Record High: The S&P 500 advanced 0.61%, closing at 6,086.37 after reaching an intraday record of 6,100.81. This marks a significant milestone as the index surpassed its previous all-time high set in December 2024, fuelled by strong earnings reports and optimism surrounding AI investments. The index has gained 3.5% year to date, showcasing its resilience despite the late 2024 pullback.
  • Nasdaq Surges Past 20,000: The Nasdaq Composite jumped 1.28% to close at 20,009.34, driven by robust performances from tech giants like Nvidia (+4%), Oracle (+6%), and Microsoft (+4%). The AI-focused investment initiative announced by President Trump has reinvigorated the sector, underscoring the transformative potential of artificial intelligence.
  • Dow Climbs on Procter & Gamble’s Strong Earnings: The Dow Jones Industrial Average rose 130.92 points, or 0.3%, to close at 44,156.73. Procter & Gamble led the gains in the index, rising nearly 2% following better-than-expected quarterly earnings, further strengthening investor confidence in the consumer staples sector.
  • European Markets Close Higher, DAX at Record Levels: European stocks were broadly higher on Wednesday, with Germany’s DAX index reaching a fresh all-time high of 21,254 points. The index was propelled by a 6% jump in Adidas shares after the company reported a 19% rise in Q4 revenues, totalling nearly €6 billion ($6.25 billion). The CAC 40 rose 0.79% to 7,602, led by strong performances in household goods and industrials, while the pan-European Stoxx 600 added 0.39%. However, the FTSE 100 in London lagged, edging down 0.04% to 8,545.13 as concerns about the UK’s December borrowing of £17.8 billion—the highest for the month in four years—weighed on sentiment. Italy’s FTSE MIB dipped 0.55%, reflecting continued pressure in southern European markets.
  • Asian Markets Mixed as Regional Trends Diverge: The Nikkei 225 surged 1.58% to close at 39,646.25, hitting a two-week high, driven by gains in technology and electronics stocks. Optimism over Japan’s position in AI development fuelled the rally, alongside strong investor sentiment ahead of the Bank of Japan’s upcoming monetary policy decision. South Korea’s Kospi rose 1.15% to 2,547.06, with SK Hynix (+2.52%) and LG Electronics (+2.85%) leading the gains amid reports that Korean firms are considering moving production facilities to the US. In contrast, Chinese equities struggled, with the CSI 300 dropping 0.93% to 3,797.02 and Hong Kong’s Hang Seng falling 1.72%. Elsewhere, India’s Nifty 50 rose 0.28%, rebounding from recent lows, while the BSE Sensex climbed 0.46%, reflecting renewed strength in Indian equities. Meanwhile, Australia’s S&P/ASX 200 advanced 0.33% to 8,429.8, supported by gains in commodity-related sectors, and Malaysia’s market awaited central bank updates on key interest rates.
  • Oil Prices Fall Amid Policy Concerns: Brent crude futures fell 0.37% to $79 a barrel, while WTI crude dipped 0.51% to $75.44, marking their lowest levels since early January. Investors are cautiously watching how President Trump’s proposed tariffs could impact global energy demand, with Brent down for the fifth consecutive session and WTI for the fourth.
  • Treasury Yields Edge Higher on Economic Optimism: The 10-year Treasury yield rose by 3 basis points to 4.607%, while the 2-year yield climbed by 2 basis points to 4.297%. Investors remain focused on potential economic impacts of President Trump’s policy initiatives, including tariff implementation and pro-business reforms, which could influence the Federal Reserve’s rate decisions.

FX Today:

  • EUR/USD Clings to Support Amid Tariff Speculation: The EUR/USD pair held above 1.0400 in Wednesday’s session, trading at 1.0415, down 0.09% for the day. The pair remains in a consolidation phase as markets digest President Trump’s potential 10% tariffs on China. Immediate resistance lies at the 50-day SMA of 1.0442, while key support holds at 1.0350. A break below this level would expose the pair to further downside toward 1.0200. Momentum indicators are mixed, with RSI stabilising and MACD showing signs of waning bearish momentum.
  • GBP/USD Consolidates Near 1.2320: The GBP/USD pair traded at 1.2320, down 0.27% for the day, as it faced resistance near 1.2400. Support remains at 1.2250, with the next level at 1.2200, which has been a significant floor during recent consolidations. Momentum indicators are neutral, with RSI steadying and MACD hinting at early bullish momentum. However, the pair remains below the 200-day SMA of 1.2790, keeping the long-term bearish trend intact.
  • AUD/CAD Extends Recovery to 0.9022 Amid Bullish Momentum: The AUD/CAD pair climbed to 0.9022, up 0.49% for the session, continuing its recovery from the 0.8900 level. The pair is now testing resistance at the 50-day SMA of 0.9013. Further upside targets include the 100-day SMA at 0.9100, while support remains at 0.8950, with 0.8900 acting as a critical floor. The pair remains below the 200-day SMA at 0.9086, indicating that the broader downtrend remains intact.
  • USD/JPY Strengthens on Trade Tensions: USD/JPY rose to 156.53, up 0.67% for the session, rebounding from recent lows near 154.50. Renewed trade tensions from President Trump’s tariff announcements added to bullish momentum. Immediate resistance lies at 157.00, with the next target at 157.50, while support holds at 155.50. Indicators such as RSI and MACD suggest continued upside potential, with the pair remaining well above key moving averages.
  • Gold Pushes to $2,755 on Safe-Haven Demand: Gold prices climbed to $2,755.78, up 0.43% for the session, benefiting from safe-haven flows amid global trade concerns and a softer US dollar. Immediate resistance is at $2,770, with a potential breakout targeting $2,800. Support lies at $2,740, with the 50-day SMA at $2,648 providing further downside protection. Momentum indicators are firmly bullish, with RSI in overbought territory and MACD reflecting strong upward momentum.

Market Movers:

  • Netflix Jumps on Membership Milestone: Netflix shares surged more than 9%, leading gains in the S&P 500, after the company reported surpassing 300 million paid memberships. The streaming giant’s fourth-quarter earnings came in at $4.27 per share, beating consensus estimates of $4.18, while revenue exceeded expectations. 
  • Oracle Rallies on AI Joint Venture: Oracle shares climbed more than 6%, continuing their upward momentum from Tuesday’s 6% gain, as the company joined a $100 billion AI infrastructure investment initiative dubbed “Stargate.” 
  • Nvidia Extends Gains Amid AI Optimism: Nvidia rose more than 4% as investors piled into AI-related stocks following the announcement of the “Stargate” project. The company remains a leader in AI chip production, and the optimism surrounding significant government and private-sector investment in AI infrastructure further buoyed its shares.
  • ARM Holdings Soars on AI Sentiment: ARM Holdings led gains in the Nasdaq 100, with its stock jumping more than 15% on Wednesday. The rally was driven by strong investor confidence in AI-related technologies, reinforced by the US government’s aggressive push for domestic AI infrastructure development.
  • Seagate Technology Surges on Strong Earnings: Seagate Technology shares climbed more than 6% after the company posted adjusted Q2 earnings per share of $2.03, exceeding analysts’ expectations of $1.87. The upbeat results reassured investors about the company’s performance in the storage solutions segment.
  • Adidas Fuels DAX Rally with Earnings Beat: Adidas shares soared 6% after the company announced a 19% rise in Q4 revenues to nearly €6 billion ($6.25 billion), excluding currency effects. Analysts from JPMorgan, BNP Paribas, and Exane raised their price targets on the stock, propelling it to the top of the DAX index, which closed at a record high.
  • Agilysys Tumbles on Lower Guidance: Agilysys shares plummeted over 19% after the company slashed its 2025 revenue forecast to $273 million, down from the previous range of $280 million–$285 million projected in October. 
  • Ford Slides on Downgrade: Ford Motor shares fell over 3% after Barclays downgraded the stock to “equal weight” from “overweight,” citing concerns about margin compression and a challenging competitive landscape in the EV market.

Markets rallied on Wednesday, with the S&P 500 and Nasdaq surging to record levels, driven by strong corporate earnings and enthusiasm for AI investments. European markets also performed well, led by the DAX and CAC 40, while Asia-Pacific markets showed mixed results amid global trade uncertainty. Gold’s push above $2,755 underscored investor caution as they weighed economic data and evolving market risks. With robust earnings boosting sentiment, markets appear well-positioned for continued gains, despite underlying geopolitical and economic concerns.