In a significant market development, the S&P 500 and Dow Jones Industrial Average recorded all-time highs on January 12. The surge was primarily supported by notable increases in technology stocks and shares from retail giant Walmart.
Walmart's stock rose by 3%, contributing to the positive momentum in both the S&P 500 and the Nasdaq, as the retailer made a transition of its stock listing to the Nasdaq from the NYSE last month. The consumer staples sector experienced a 1.4% increase, with technology stocks also seeing positive growth.
"Walmart is set to join the Nasdaq-100 index on January 20, a shift that could draw in billions of dollars from passive index funds," said a market analyst. This upcoming transition is anticipated to bolster Walmart's visibility and further enhance its stock performance.
Market participants were initially unsettled by news regarding U.S. Justice Department investigations into Federal Reserve Chair Jerome Powell. The inquiry entails comments Powell made during a congressional hearing related to a renovation project, igniting discussions about the independence of the Fed.
Powell, in response to the investigation, referred to it as a "pretext" aimed at increasing external influence over interest rates, an issue that has been a focal point since President Donald Trump took office in January 2025. "The news that Powell is being investigated... I think the market is taking it in stride for now," remarked Peter Cardillo, chief market economist at Spartan Capital Securities.
He further noted, "The fact that you had former Fed governors come out in support of Powell... is also comforting to markets." Such endorsements from past Federal Reserve officials help mitigate fears surrounding Powell's ability to govern monetary policy without undue interference.
Investors are also gearing up for the fourth-quarter earnings season, which unofficially kicks off on January 13 with reports from significant banks including JPMorgan Chase. Cardillo pointed out that “investors are looking ahead” to the earnings reports which analysts predict will show a 26.5% year-over-year earnings growth in the technology sector. Overall, S&P 500 companies’ earnings are projected to rise by 8.8% compared to last year.
On the closing bell, the Dow gained 86.13 points, moving up 0.17% to 49,590.20. The S&P 500 climbed 10.99 points or 0.16% finishing at 6,977.27, and the Nasdaq Composite advanced by 62.56 points, up 0.26%, to close at 23,733.90.
However, not all sectors flourished. Financial stocks faced a downturn as President Trump called for a one-year cap on credit card interest rates at 10% starting from January 20. This announcement sent financial stocks tumbling, with the financial sector declining by 0.8%.
Major players such as Citigroup and American Express suffered significant declines with Citigroup falling by 3% and American Express dropping by 4.3%. The impact was felt across consumer finance firms, with Capital One ending the day down 6.4%.
As the market responds to these developments, investors remain attentive to both upcoming earnings reports and the potential ramifications of the Fed investigation. With expected earnings growth in the technology sector, analysts are optimistic about the market's ability to weather regulatory challenges as companies prepare for a pivotal earnings season.