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An extended rebound in tech stocks sent the S&P 500 and the Nasdaq Composite notably higher to start the week. Price action for the Dow Jones Industrial Average was more muted, though the blue-chip index held its footing atop the psychologically significant 50,000 level.
At the close, the S&P 500 was up 0.5% at 6,964 and the Nasdaq gained 0.9% to 23,238. And while the Dow ticked up just 0.04% to 50,135, it was its second straight close above 50k and a new all-time high.
The Dow above 50,000 has many investors “wondering where it will go next,” says Terry Sandven, chief equity strategist at U.S. Bank Asset Management Group. While the milestone is a symbolic one, “underlying fundamental factors are perhaps more telling about the future direction of the popular index.”
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For instance, Sandven believes more upside to the Dow will be supported by “constructive fundamentals” such as “stable inflation, low interest rates, and rising earnings.”
However, he’s quick to point out that risks remain, including elevated valuations, ongoing tariff uncertainty and speculation leading up to the outcome of this year’s midterm elections. These all have the potential to create headwinds for the broader market and fuel volatility.
D.A. Davidson upgrades Oracle on OpenAI enthusiasm
Worries about Big Tech’s return on artificial intelligence investments and AI’s potential threat to software companies caused tech stocks to sell off last week. But today, strength came from the technology sector, particularly in stocks with exposure to AI, including AppLovin (APP, +13.2%) and Palantir Technologies (PLTR, +5.2%).
AI chipmakers were also big gainers on Monday, with Nvidia (NVDA) climbing 2.5% and Broadcom (AVGO) rising 3.4%.
Meanwhile, Oracle (ORCL), which came into today’s session down 26.5% for the year to date, jumped 9.6% after D.A. Davidson analyst Gil Luria upgraded the software stock to Buy from Neutral (Hold).
Luria believes that recent concerns over the impact of AI on software firms are overblown and that “companies will continue to pay for Oracle’s products and … not be vibe coded away.”
He adds that OpenAI appears to be raising enough cash to pay for the data centers Oracle is building for it, which “will serve as a catalyst for outperformance.”
Robinhood gets upgraded ahead of earnings
Robinhood Markets (HOOD, +4.5%) was another stock that rallied today on a bullish analyst note. Wolfe Research’s Steve Chubak upgraded the fintech to Outperform (Buy) from Peer Perform (Hold) with a $125 price target, representing implied upside of 44% to current levels.
Chubak says that HOOD’s recent decline – shares are off more than 43% from their October peak – presents a buying opportunity.
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Additionally, he believes prediction market growth and stronger engagement in options, stocks and margin from retail traders could result in a positive surprise to consensus estimates for the company’s fourth-quarter earnings report, which is due out after tomorrow’s close.
Kyndryl spirals 55% on CFO split, accounting review
Not all of the day’s price action was to the upside, though. Kyndryl Holdings (KD), the IT infrastructure services provider that was spun off from International Business Machines (IBM, -0.9%) in 2021, plunged 54.9% after the company revealed an accounting investigation into its cash management practices.
The company also announced the departure of Chief Financial Officer David Wyshner and General Counsel Edward Sebold, effective immediately.
Jobs, inflation data on tap
While the earnings calendar remains jam-packed this week, with Coca-Cola (KO) set to report tomorrow morning, the economic calendar brings some key updates as well.
First up is Wednesday morning’s release of the January jobs report, delayed from its initial release due to the short-lived government shutdown. And on Friday, Wall Street will see the January Consumer Price Index (CPI) report.
Wells Fargo economists expect “a cleaner read on inflation” this time around as distortions from last fall’s shutdown-delayed data fade.
As for the jobs report, the economists think the data will “leave the tepid picture of the labor market little changed,” though the 80,000 new jobs they forecast is better than the 50,000 jobs added in December.