- S&P 500 and Dow Jones continued to advance, boosted by strong earnings reports.
- President Trump announces major AI investment drive called Stargate.
- The Dow Jones has risen approximately 6% since January 13, and is approaching overbought territory on the RSI. Time for a pause?
- Earnings season continues with upcoming reports from GE Aerospace, American Express, and Verizon.
U.S. stocks saw the good times continue yesterday following blockbuster earnings and subscriber growth from Netflix (NASDAQ:NFLX). This further boosted sentiment after President Trump announced yesterday that a joint venture between OpenAI, SoftBank, and Oracle (NYSE:ORCL) will invest billions in building AI infrastructure.
President Trumps AI Push + Earnings Season
OpenAI, SoftBank (TYO:9984), and Oracle have teamed up in a joint venture called Stargate. They’re starting with a $100 billion investment and might invest up to $500 billion over the next four years.
This announcement was made at the White House by OpenAI’s CEO Sam Altman, Oracle’s Chairman Larry Ellison, and SoftBank’s CEO Masayoshi Son, according to CBS News and the Wall Street Journal.
There does appear to be some apprehension and questions surrounding the deal and how it would be financed with Elon Musk lending his voice to the conversation. The worlds richest man claimed that they do not have the money and he has it on good authority that Softbank has secured under $10 billion. These claims are yet to be verified.
Markets received the news positively with Oracle stock rising around 10%. The news helped US Indices with the S&P 500 reversing early losses to close the day up 0.6% with the Dow Jones recording gains of around 0.95%.
US Indices have continued their advance yesterday helped largely by the continuation of positive earnings releases from US companies. Netflix being the major company reporting after market close yesterday saw its stock rally some 15% while dragging competitors in the streaming space higher as well.
Dow Jones Industrial Average Index Heatmap, 22 January, 2025
Source: TradingView (click to enlarge)
The positive earnings news continued yesterday but in the case of Johnson & Johnson (NYSE:JNJ) which reported positive earnings for the 4th quarter on the back of the sales of its cancer treatment. However, JNJ was unable to hold onto gains and slipped to trade 1.7% lower after the US open.
Looking at the S&P 500 and the major movers for the day, Moderna (NASDAQ:MRNA) has passed Netflix ever so slightly but there does seem to be a slight pullback occurring at the time of writing.
This comes as the S&P 500 touches its all-time highs around the 6094 handle. This could be in part down to potential profit-taking
Source: LSEG (click to enlarge)
The Road Ahead
Earnings season continues tomorrow with GE Aerospace reporting pre-market and on Friday we have American Express (NYSE:AXP) and Verizon (NYSE:VZ) communications ahead of the market open.
When it comes to President Trump and the new US administration, all moves are likely to be scrutinized. So far though, the major stumbling block which was the possibility of immediate tariffs has been delayed and thus helped market sentiment.
However, it will be interesting to gauge the reaction of US stocks as the February 1 deadline for tariffs draws closer. The fact that we are in earnings season which so far has exceeded expectations does mean that any downside may face buying pressure, provided that US earnings continue to beat estimates.
Technical Analysis – Dow Jones
From a technical standpoint, the Dow Jones has enjoyed an impressive rally since bottoming out on January 13, 2025. Since then the index has risen around 2454 points, close to a 6% gain.
Bulls have taken charge since a change in structure on January 15, when the previous swing high was broken before continuing to print a higher high. The index has recorded one bearish day in the last 8 and is also approaching the overbought area on the 14-period RSI.
Does this point to a potential retracement in the coming days?
The fundamental picture and market sentiment at this stage would hint at a no, while the technicals may see some exhaustion, but i do think any pullbacks at this stage are likely to be short lived.
A poor batch of earnings releases or a more hawkish Fed next week could change that but for now the bulls seem firmly in control.
Immediate resistance rests at 44451 with a break above opening up a retest of the ATH just above the 45000 handle.
If there is to be some form of retracement, then immediate support may be found at 43400 before the 42764 and 42446 levels come into focus.
Dow Jones (US30) Daily Chart, January 22, 2025
Source: TradingView
Support
- 43400
- 42764
- 42446
Resistance
- 44452
- 44759
- 45097 (ATH)
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