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The AI Boom: How Tech Stocks are Hitting New Highs

USAThursday, January 23, 2025
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Stocks are soaring, with the S&P 500 reaching its highest point ever. This uptick follows a drop in the 10-year Treasury yield, which has been fueling the market's growth. However, on Wednesday, the yield slightly increased, going back up to 4. 6%. The dollar also hit a two-week low, causing some friction for multinational companies. Johnson & Johnson, for instance, expects a $1. 7 billion hit due to unfavorable currency rates. Procter & Gamble isn't faring much better, with a $300 million after-tax impact. Even Abbott Labs, which reported strong quarterly results with organic sales increasing by 10. 1%, felt the pinch of the strong dollar. The tech sector is making waves, thanks to a huge investment in AI infrastructure. OpenAI, Oracle, and SoftBank have teamed up to invest an initial $100 billion through their joint venture, Stargate. This collaboration signals that AI spending isn't slowing down anytime soon. Communication services are also performing well, driven by Netflix. While Meta and Alphabet are up too, the automotive sector saw a big win with Aptiv announcing plans to separate its electrical distribution systems division from its higher-margin software business. Utilities and real estate, however, are struggling due to higher Treasury yields. Banks are taking a break after a strong earnings run, and energy stocks are mixed, with oil service companies like Halliburton showing weaker results. After the market closes on Wednesday, investors will be eyeing reports from Kinder Morgan, Alcoa, and SL Green. The next day will be hectic with reports from GE Aerospace, American Airlines, and several others slated to release their earnings before the market opens.
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