AI stocks surge as Trump’s second term begins

Trump’s return to the White House sparked a broad market rally, with AI stocks seeing a notable late-day surge on news of upcoming infrastructure investments.

Market Overview; The stock market extended previous gains as investors responded positively to the initial policy directions of the second Trump administration.

• Treasury yields decreased as trade policies appeared less aggressive than anticipated
• Early concerns about immediate tariff implementation proved premature, with a more gradual approach being adopted
• The administration indicated potential 25% tariffs on Canadian and Mexican imports could begin February 1
• China tariff plans remain unclear, though implementation is expected

Sector Performance; A widespread market advance saw gains across most sectors, with only energy showing weakness.

• Industrial, utilities, and real estate sectors led the positive momentum
• Technology sector lagged despite AI stock gains, primarily due to Apple’s 4% decline
• Apple’s weakness stemmed from analyst warnings about disappointing iPhone sales and upcoming quarterly results

AI Infrastructure Initiative; A significant private sector investment plan for AI infrastructure development provided a catalyst for related stocks.

• OpenAI, Oracle, and Softbank are forming a joint venture to spearhead the investment initiative
• Softbank has already committed to a $100 billion U.S. investment
• Nvidia saw immediate share price benefits from the announcement
• Other beneficiaries include Broadcom, Eaton (electrification), Dover (cooling solutions), and major cloud providers Amazon, Microsoft, and Alphabet

Earnings Calendar; A busy week of corporate earnings reports will provide additional market direction.

• Netflix, United Airlines, Seagate, and Capital One report after Tuesday’s close
• Abbott Labs headlines Wednesday morning reports, with expectations for 10% earnings growth
• Other notable Wednesday reporters include Procter & Gamble, Halliburton, Johnson & Johnson, and GE Vernova

Looking Beyond the Headlines; While the market response to Trump’s initial policies has been positive, the gradual approach to tariffs suggests a more measured implementation of campaign promises, potentially reducing immediate economic disruption but leaving uncertainty about long-term trade policy impacts.