On Wednesday, U.S. stock indices surged across the board, with the S&P 500 Index hitting an all-time high during the day. Investors reacted positively to the quarterly earnings of streaming giant Netflix and President Trump's proposed investment plan for artificial intelligence infrastructure, boosting market sentiment.
The technology sector was a key driver of the S&P 500's rise, increasing by 2.5% and outperforming all other sectors among the 11 major industry indices in the S&P 500. Leading companies in the AI field like NVIDIA and Microsoft were particularly prominent, providing the main lift to the index.
Netflix's stock price soared by 9.7%, making it the best performer in the S&P 500. The company announced record-breaking holiday-quarter subscriber numbers, prompting a decision to raise prices for most of its service plans. Investors were optimistic about its performance, further reinforcing the upward trend in tech stocks.
President Trump announced on Tuesday a $500 billion investment plan in AI infrastructure by private companies such as Oracle, OpenAI, and SoftBank. Although the sources of the funds were not clear, the news ignited enthusiasm in the market for the AI sector. As a result, Oracle's stock rose by 6.8%, and the U.S. stock price of ARM, a chip technology supplier 90% owned by SoftBank, soared by 15.9%. Server manufacturer Dell's stock also increased by 3.6%.
Matt Stucky, Lead Investment Portfolio Manager of Stocks at Northwestern Mutual, said, “Wednesday's rally was primarily concentrated in large tech stocks, particularly in the semiconductor sector, which was most notably boosted by the AI plan.” The Philadelphia Semiconductor Index performed outstandingly, closing with a 1.7% increase. However, Stucky also noted that since the funding sources for Trump's plan are unclear, it seems more like "an investment story with a pie in the sky."
While gains were recorded in the technology and communication services sectors, other industries performed relatively weakly. The communication services sector rose by 1.1%, whereas the utilities sector fell by 2.2%, becoming the worst-performing industry.
Irene Tunkel, Chief U.S. Equity Strategist at BCA Research, stated that this wave of gains was more due to excitement over tech investments, with other sectors showing a more tepid performance.
Recent robust economic data and easing inflation also provided positive signals for the market. Investors' risk appetite increased, and Trump's tariff policies were milder than the market expected. However, due to inflation concerns, investors are closely watching the direction of the President's trade policies.
Barclays analysts revealed that Trump has requested federal agencies to complete a series of trade issue reviews by April 1, which might become a focal point for the market in the future.
