Hackett also noted that while the bar for earnings is high, the market is showing impressive resilience.

“A break to a new record high would energize the bulls as earnings seasons have been choppy in recent quarters,” he concluded.

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

Consecutive annual gains of more than 20% for the S&P 500 do not necessarily mean that US stocks need to pull back, as history shows that the market has typically continued to deliver solid, if quieter, returns the following year.” , said Jeff Schulze at ClearBridge Investments. “Also, the current rally is far from the longest without a correction.”

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

“While we continue to closely watch the next moves of the new administration, investors should not lose sight of the fundamentals that remain favorable for US stocks,” said Solita Marcelli at UBS Global Wealth Management. “Without a single-name view, we continue to like tech, utilities and financials, and see value in using structured strategies to navigate near-term volatility.”

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

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

The Nasdaq 100 has nearly doubled since the start of 2023, adding $14 trillion in value in the process. Evercore ISI’s Rich Ross is prepared for this rally to continue, ignoring fears of a familiar foe: bond yields.

Treasury rates rose to multi-month highs last week as investors looked to economic data for clues about the Federal Reserve’s next interest rate cut. Since then, the US 10-year yield has edged lower after reaching a relative strength reading that normally signals a pullback. Combine that with positive technical signals, and the Nasdaq 100 and S&P 500 look poised to hit new all-time highs during the first quarter, according to Ross.

“At the end of the day, the technology remains in an exceptional position to continue to lead this higher end market,” Ross said.

Corporate aspects:

• Shares of Netflix Inc. soared after the streaming giant reported its biggest quarterly subscriber increase ever, boosted by its first live sporting events and the return of Squid Game.

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

• Google from Alphabet Inc. won a UK court ruling to stop Russian media companies from seizing the tech giant’s global assets to recoup fines imposed by Russian courts that have now accrued interest many times the size of the world economy combined.

• United Airlines Holdings Inc. expects a solidly profitable first quarter as the company capitalizes on strong demand during the winter months, a surprising turnaround from a typically slow travel period.

• Procter & Gamble Co.’s organic sales. they beat estimates for higher volume, a change from previous quarters where most of the company’s growth came from higher prices.

• Johnson & Johnson said a strong dollar will cut into 2025 revenue and profit, pushing its forecast below analysts’ expectations and sending its stock lower.

• Abbott Laboratories forecasts lower-than-expected first-quarter earnings but a full-year profit in line with Wall Street estimates, as the healthcare company points to strong demand for its medical devices as growth engine this year.

• Ally Financial Inc.’s fourth quarter earnings. rose as its net interest margin beat analysts’ estimates and bad debt expenses and provisions declined.

Key events this week:

• Eurozone consumer confidence, Thursday

• US jobless claims, Thursday

• Bank of Japan policy meeting, Friday

• Eurozone HCOB manufacturing and services PMI, Friday

• US University of Michigan Consumer Sentiment, Existing Home Sales, S&P Global Manufacturing & Services PMI, Friday

Some of the main movements in the markets:

stocks

• The S&P 500 was up 0.8% at 12:51 p.m. New York time

• The Nasdaq 100 rose 1.6%

• The Dow Jones Industrial Average rose 0.2%

• The MSCI World index rose 0.7%

• The Bloomberg Magnificent 7 Total Return Index rose 1.7%

• Russell 2000 index fell 0.6%

coins

• The Bloomberg Dollar Spot Index was little changed

• The euro fell 0.1% to $1.0416

• The British pound fell 0.2% to $1.2320

• The Japanese yen fell 0.7% to 156.61 per dollar

Cryptocurrencies

• Bitcoin fell 2.2% to $104,426.78

• Ether fell 1.5% to $3,283.7

good ones

• The 10-year Treasury yield advanced four basis points to 4.61%

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

• UK 10-year yield advanced four basis points to 4.63%

Merchandise

• West Texas Intermediate crude rose 0.1% to $75.93 a barrel

• Spot gold rose 0.5% to $2,757.68 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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