NEW YORK — Technology stocks, including major players like Netflix and Oracle, are pushing U.S. stock indexes higher as corporate profits grow and optimism around artificial intelligence (AI) expands.
The S&P 500 saw a 0.8% increase in midday trading and was poised to break its previous all-time high from early last month. The Dow Jones Industrial Average gained 136 points, or 0.3%, by 11:55 a.m. Eastern time, while the Nasdaq composite experienced a 1.5% rise.
Netflix played a significant role in this upward movement, reporting that live events—such as football games and a highly anticipated fight between Mike Tyson and Jake Paul—contributed to its addition of nearly 19 million subscribers in the recent quarter. Additionally, the company recorded higher-than-expected profits and announced plans to increase subscription prices in the U.S. and other regions, leading to an impressive 11.1% jump in its stock.
This growth aligns Netflix with a growing number of firms that have surpassed analysts’ profit forecasts for the conclusion of 2024. Such positive results bolster their stock values and help counter the downward pressure caused by rising Treasury yields in the bond market.
The increase in yields has been linked to ongoing concerns about persistent inflation and the rising debt levels of the U.S. government, which have caused some stocks to falter and momentarily stalled their impressive gains from earlier this year.
Procter & Gamble saw a 2.9% rise in its shares after exceeding profit and revenue expectations in its latest quarter. The company, known for brands like Charmin and Pampers, reassured investors that it would maintain its financial outlook for the entire fiscal year, even in light of challenges posed by increased commodity prices and the stronger U.S. dollar affecting international results.
Travelers also noted a gain of 4.2% following its successful quarter, where it outstripped analysts’ profit expectations. The insurer attributed its growth to strong investment returns and an increase in net written premiums, successfully managing to overcome losses incurred from Hurricane Milton and other disasters.
A significant share of the market’s upward movement came from AI-focused companies. Oracle’s stock surged by 6.5%, adding to its 7.2% increase from the previous day. This rise comes ahead of an anticipated announcement about Stargate, a partnership with the White House that’s set to establish data centers and renewable energy sources in Texas to further AI development.
This collaboration involving Oracle, OpenAI, and SoftBank is poised to invest up to $500 billion. As a result, SoftBank Group Corp. shares in Tokyo rose by 10.6%. Following suit, other AI-centric stocks also reported gains, maintaining their strong momentum; Nvidia’s stock rose by 3.9%, pushing past $146, a striking contrast to its valuation of below $18 just two years ago.
These stock gains helped offset a 4% decline for Textron. Although the company behind Bell helicopters and Cessna airplanes reported stronger-than-expected quarterly profits, its revenue did not meet forecasts, and its profit outlook for the upcoming year disappointed some analysts.
Internationally, European indexes moved higher following a mixed close in Asian markets.
In the bond market, the 10-year Treasury yield increased to 4.60% from 4.57% late on Tuesday. While it had been trending downward after a favorable inflation report last week, rates remain significantly higher than the sub-3.65% levels seen in September.
Strategists from BlackRock Investment Institute predict that interest rates will remain elevated for an extended period due to various factors, including an aging workforce and the U.S. government’s high debt levels.
“Investors are demanding more compensation for the risk of holding long-term bonds, pushing the term premium to a decade high,” stated BlackRock strategists led by Jean Boivin.
For stocks to maintain their strength and continue rising in the face of high interest rates, companies will need to consistently exhibit robust profit growth, and Boivin noted some positive indicators supporting this expectation.
In the cryptocurrency market, bitcoin hovered below $104,000 after reaching a record over $109,000 on Monday. The market is experiencing some caution following controversial meme coin projects launched by President Donald Trump and his wife, which critics deemed a desperate attempt to profit.
