A rally in big tech fueled by optimism over artificial intelligence and a batch of earnings from corporate heavyweights sent stocks to the brink of their all-time highs.

Equities extended this year’s advance, with the S&P 500 briefly topping 6,100. Netflix Inc. surged almost 10% amid its biggest-ever subscriber gain. Nvidia Corp. led gains in megacaps while Oracle Corp. soared over 6.5% on a $100 billion joint venture with SoftBank Group Corp. and OpenAI, an effort unveiled with President Donald Trump that further boosts prospects for the AI mania that has powered the bull market.

“The promise of a huge pool of money funding AI investment, whether fully funded or not, is enough to have investors enthusiastic once again about the artificial intelligence and almost anything related to it,” said Steve Sosnick at Interactive Brokers.

Despite a recent broadening attempt of the market beyond a handful of tech megacaps, most companies in the S&P 500 actually fell. Poor breadth has been a major concern of investors, especially among those nervous about sky-high valuations and frothy AI stocks.

JPMorgan Chase & Co.’s chief Jamie Dimon said there are signs that the U.S. stock market is overheated.

“Asset prices are kind of inflated,” Dimon told CNBC. “You need fairly good outcomes to justify those prices.”

The S&P 500 rose 0.6%. The Nasdaq 100 climbed 1.3%. The Dow Jones Industrial Average added 0.3%. A Bloomberg gauge of the “Magnificent Seven” megacaps gained 1.3%. The Russell 2000 fell 0.6%. Travelers Cos. and Procter & Gamble Co. climbed on strong results.

The yield on 10-year Treasuries advanced two basis points to 4.6%. The Bloomberg Dollar Spot Index wavered.

“Markets are reacting positively to the initial wave of Trump policies, with investors showing enthusiasm reminiscent of the run-up to the election as they breathe a sigh of relief over the tariff announcements and the early stages of earnings season,” said Mark Hackett at Nationwide. “A breakout to a fresh record high would energize the bulls, as earnings seasons have been choppy in recent quarters,” he concluded.

To Matt Maley at Miller Tabak, if this earnings season is a good one, it’s a rally that could have legs. However, it will take more than merely “beating expectations” to fuel a further advance of significance.

“We stay risk-on and expect earnings to fuel equities,” said BlackRock Investment Institute strategists including Jean Boivin and Wei Li. “Even in a higher-rate environment, we still think stocks can keep pushing higher as long as fundamentals stay strong.”

After the S&P 500 soared 24% in 2023 and 23% in 2024, lofty valuations brought some discussion on whether the benchmark will be able to achieve such a performance again this year.

Back-to-back annual gains of over 20% for the S&P 500 do not necessarily make U.S. equities due for a pullback, as history shows the market has typically continued to deliver solid, albeit more muted, returns in the following year,” said Jeff Schulze at ClearBridge Investments. “Further, the current rally is far from the longest without a correction.”

Schulze also noted that earnings growth has largely been concentrated amongst a small group of stocks in recent years. This is expected to shift in 2025 with a broadening of earnings participation, which should lead to improved relative performance for small/mid cap and value laggards.

“While we continue to watch the new administration’s next moves closely, investor should not lose sight of the fundamentals that remain favorable for U.S. equities,” said Solita Marcelli at UBS Global Wealth Management. “Without taking any single-name views, we continue to like technology, utilities, and financials, and see value in utilizing structured strategies to navigate near-term volatility.”

The stock market’s “January effect” is taking shape so far, with stocks performing strongly throughout the month, according to to John Creekmur at Creekmur Wealth Advisors.

“Investors are now more focused on earnings and hopes for tax cuts and deregulation from the new Trump administration, and less so about worries of fewer Federal Reserve rate cuts this year,” he noted.

Corporate highlights:

—Netflix Inc. reported its biggest quarterly subscriber gain in history, buoyed by its first major live sporting events and the return of Squid Game.

—Salesforce Inc. Chief Executive Officer Marc Benioff said there will be “thousands” of deals for its new Agentforce AI product in the current fiscal quarter.

—Samsung Electronics Co. plans to launch an ultrathin version of its Galaxy S25 phone in the first half of this year, beating Apple Inc. to a promising new category.

—Alphabet Inc.’s Google won a UK court ruling to block Russian media firms from seizing the tech giant’s global assets to recover Russian court-imposed fines that have now accrued interest equal to many times more than the world’s economy combined.

—United Airlines Holdings Inc. expects a solidly profitable first quarter as the carrier capitalizes on strong demand during the winter months, a surprising shift from a normally sluggish travel period.

—Procter & Gamble Co. organic sales surpassed estimates on higher volume, a change from earlier quarters where most of the company’s growth came from price hikes.

—Johnson & Johnson warned Wall Street about the perils of the strong dollar. Now the drug and device maker is saying analysts failed to hear the message.

—Abbott Laboratories is forecasting lower-than-expected first-quarter earnings but full-year profit in line with Wall Street estimates as the health care company points to strong demand for its medical devices as a growth driver this year.

—Ally Financial Inc. fourth-quarter earnings surged as its net interest margin beat analysts’ estimates and expenses and provisions for bad debt declined.

Key events this week:

—Eurozone consumer confidence, Thursday

—U.S. jobless claims, Thursday

—Bank of Japan policy meeting, Friday

—Eurozone HCOB Manufacturing & Services PMI, Friday

—U.S. University of Michigan consumer sentiment, existing home sales, S&P Global Manufacturing & Services PMI, Friday

Some of the main moves in markets:

Stocks

—The S&P 500 rose 0.6% as of 4 p.m. New York time

—The Nasdaq 100 rose 1.3%

—The Dow Jones Industrial Average rose 0.3%

—The MSCI World Index rose 0.5%

—Bloomberg Magnificent 7 Total Return Index rose 1.3%

—The Russell 2000 Index fell 0.6%

Currencies

—The Bloomberg Dollar Spot Index was little changed

—The euro fell 0.2% to $1.0412

—The British pound fell 0.3% to $1.2317

—The Japanese yen fell 0.7% to 156.54 per dollar

Cryptocurrencies

—Bitcoin fell 2.3% to $104,337.28

—Ether fell 2.3% to $3,255.98

Bonds

—The yield on 10-year Treasuries advanced two basis points to 4.60%

—Germany’s 10-year yield advanced two basis points to 2.53%

—Britain’s 10-year yield advanced four basis points to 4.63%

Commodities

—West Texas Intermediate crude fell 0.5% to $75.43 a barrel

—Spot gold rose 0.4% to $2,756.78 an ounce

This story was produced with the assistance of Bloomberg Automation.

(With assistance from Cecile Gutscher, Sujata Rao, Robert Brand and Aya Wagatsuma.)

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