S&P 500 Reaches New Record Closing High As U.S. Stocks Extend Uptrend

Stocks moved mostly higher over the course of the trading day on Thursday, extending the strong upward move seen over the past several sessions. The S&P 500 closed higher for the seventh time in the past eight sessions, reaching a new record closing high.

The major averages reached new highs going into the close of trading. The Dow jumped 408.34 points or 0.9 percent to 44,565.07, the S&P 500 climbed 32.34 points or 0.5 percent to 6,118.71 and the Nasdaq rose 44.34 points or 0.2 percent at 20,051.68.

The markets continued to benefit from recent upward momentum, which has help stocks largely offset the sell-off seen earlier this month.

Optimism about a more pro-business administration under new President Donald Trump has helped offset concerns about the outlook for interest rates.

Potentially adding to the positive sentiment, Trump said during remarks at the World Economic Forum in Davos, Switzerland, that he will “demand that interest rates drop immediately.”

Trump also said he would ask Saudi Arabia and other members of OPEC to lower oil prices, contributing to a downturn by the price of crude oil.

Notably, Trump did not specifically comment on the level of tariffs he plans to impose on certain countries, which is one of the lingering areas of concern about his presidency.

In U.S. economic news, the Labor Department released a report showing initial jobless claims saw further upside in the week ended January 18th.

The Labor Department said initial jobless claims rose to 223,000, an increase of 6,000 from the previous week’s unrevised level of 217,000. Economists had expected jobless claims to inch up to 220,000.

With the increase, jobless claims continued to regain ground after hitting a nearly eleven-month low in the week ended January 4th.

Sector News

Biotechnology stocks showed a strong move to the upside as the day progressed, driving the NYSE Arca Biotechnology Index up by 1.8 percent to its best closing level in almost four years.

Considerable strength also emerged among networking stocks, as reflected by the 1.4 percent gain posted by the NYSE Arca Networking Index. The index reached a new record closing high.

Healthcare, pharmaceutical and oil producer stocks also saw notable strength, while airline stocks came under pressure amid disappointing guidance from American Airlines (AAL).

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index advanced by 0.8 percent, while Hong Kong’s Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.’s FTSE 100 Index rose by 0.2 percent, the French CAC 40 Index and the German DAX Index both climbed by 0.7 percent.

In the bond market, treasuries extended the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 3.9 basis points to 4.638 percent.

Looking Ahead

American Express (AXP), Ericsson (ERIC) and Verizon (VZ) are among the companies due to report their quarterly results before the start of trading on Friday.

A report on existing home sales may also attract attention on Friday along with a revised reading on consumer sentiment.

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CHNI: Democrats vote against ban on transgender athletes

Editor: I will say it again.  Democrats suffer from mental illness!

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Musk clashes with OpenAI CEO Sam Altman over Trump-supported Stargate AI data center project

STARGATE

Elon Musk is clashing with OpenAI CEO Sam Altman over the Stargate artificial intelligence infrastructure project touted by President Donald Trump, the latest in a feud between the two tech billionaires that started on OpenAI’s board and is now testing Musk’s influence with the new president.

Trump on Tuesday had talked up a joint venture investing up to $500 billion through a new partnership formed by OpenAI, the maker of ChatGPT, alongside Oracle and SoftBank.

The new entity, Stargate, is already starting to build out data centers and the electricity generation needed for the further development of fast-evolving AI technology.

Trump declared it “a resounding declaration of confidence in America’s potential” under his new administration, with an initial private investment of $100 billion that could reach five times that sum.

But Musk, a close Trump adviser who helped bankroll his campaign and now leads a government cost-cutting initiative, questioned the value of the investment hours later.

“(T)his is great for the country. i realize what is great for the country isn’t always what’s optimal for your companies, but in your new role i hope you’ll mostly put (America) first,” Altman wrote, using a U.S. flag emoji to represent America.

Behind the feud
The public clash over Stargate is part of a years-long dispute between Musk and Altman that began with a boardroom rivalry over who should run OpenAI, which both men helped found.

Musk, an early OpenAI investor and board member, sued the artificial intelligence company last year alleging it had betrayed its founding aims as a nonprofit research lab benefiting the public good rather than pursuing profits.

Musk has since escalated the dispute, adding new claims and asking for a court order that would stop OpenAI’s plans to convert itself into a for-profit business more fully. A hearing is set for February in a California federal court.

The world’s richest man, whose companies include Tesla, SpaceX and X, last year started his own rival AI company, xAI, that is building its own big data center in Memphis, Tennessee. Musk says it faces unfair competition from OpenAI and its close business partner Microsoft, which has supplied the huge computing resources needed to build AI systems such as ChatGPT.

When did Stargate start?
Tech news outlet The Information first reported on an OpenAI data center project called Stargate in March 2024, indicating that it’s been in the works long before Trump announced it.

Another company — Crusoe Energy Systems — announced in July it was building a large and “specially designed AI data center” at the northwest edge of Abilene, Texas at a site run by energy technology company Lancium. Crusoe and Lancium said in a joint statement at the time that the project was “supported by a multibillion-dollar investment” but didn’t disclose its backers.

AI technology requires huge amounts of electricity to build and operate and both companies said the project would be powered with renewable sources such as nearby solar farms, in a way that Lancium CEO Michael McNamara said would “deliver the maximum amount of green energy at the lowest possible cost.” Crusoe said it would own and develop the facility.

It’s not clear how and when that project became the first phase of the Stargate investment revealed by Trump. Abilene Mayor Weldon Hurt said construction began about nine months ago but “we didn’t know it was going to be quite this big. We thought it was going to be about a third of this size.”

Oracle co-founder Larry Ellison said Tuesday that the Abilene project is the first of about 10 data center buildings currently being built and that number could expand to 20.

Hurt told The Associated Press that the region surrounding Abilene, a city of about 130,000 people, benefits from a wealth of energy sources, including oil, gas, solar and some of the “largest wind farms in the world,” though Trump signaled opposition to wind power this week by temporarily halting approval of wind projects on federal lands.

“We have the capability to produce the energy for this market so it really means a lot for a town like Abilene,” Hurt said. “To have this opportunity here in west-central Texas, to have something like this to make Abilene substantial, we’re just excited about it.”

Where is Microsoft?
Missing from Trump’s press conference Tuesday was Microsoft, which has long supported OpenAI with billions of dollars in investments and enabling its data centers to be used to build the models behind ChatGPT and other generative AI tools.

Microsoft is also a technology partner in the Stargate project, along with chipmakers Nvidia and Arm, but put out a statement noting that its OpenAI partnership will “evolve” in a way that enables OpenAI “to build additional capacity, primarily for research and training of models.”

Asked about Musk’s comments about the Stargate deal Wednesday during a CNBC interview at the World Economic Forum in Davos, Switzerland, Microsoft CEO Satya Nadella pivoted to his company’s own $80 billion plan to build out its global AI infrastructure, of which $50 billion is being spent in the U.S.

“Look, all I know is, I’m good for my $80 billion,” said Nadella, laughing.

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Ramaswamy leaves Trump administration after one day

Trump 2.0 has only just started, and it has already had its first political casualty.

Back in November, then president-elect Donald Trump tapped Vivek Ramaswamy along with tech tycoon Elon Musk to lead a new agency focused on cutting federal spending and reducing government bureaucracy.

The Department of Government Efficiency, dubbed ‘DOGE,’ will operate outside traditional government structures with a mandate to identify and eliminate excessive regulation and spending.

The name references a cryptocurrency meme associated with Musk, who has pledged to target $2 trillion in federal budget cuts.

But much like his run for president was short-lived, so was Ramaswamy’s time at DOGE. 1 day to be precise.

On Monday, Trump spokesperson Anna Kelly confirmed his exit and suggested the billionaire is preparing to pursue political office in Ohio. The timing aligns with the 2026 Ohio gubernatorial race, as current Governor Mike DeWine will be term-limited and unable to seek reelection.

“Vivek Ramaswamy helped create DOGE,” Kelly told Fox News. “He intends to run for elected office soon, which requires him to remain outside of DOGE, based on the structure that we announced today. We thank him immensely for his contributions over the last 2 months and expect him to play a vital role in making America great again.”

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WATCH LUNAR DATES FOR POSSIBLE CHANGE OF DIRECTION POINTS IN THE MARKET.  

What is the Plunge Protection Team?

The Plunge Protection Team (PPT) is an informal term for the Working Group on Financial Markets. The working group was created in 1988 by then U.S President Ronald Reagan following the infamous October 1987 Black Monday market crash. It was formed to re-establish consumer confidence and take steps to achieve economic and market stability in the aftermath of the market crash. The U.S president consults with the team during times of economic uncertainty and turbulence in the markets.

The Working Group on Financial Markets’ informal name “Plunge Protection Team” was coined and popularized by The Washington Post in 1997.

What does the Plunge Protection Team Do?

The Plunge Protection Team was initially formed to advise the president and regulatory agencies on countering the negative impacts of the stock market crash of 1987. However, the team has continued to report to various presidents since that stock market crash and has met various U.S presidents on important financial matters over the years.

The team was believed to be behind the rally in the stock market shortly after a hefty drop in the Dow Jones Industrial Average (DJIA) on February 05, 2018. As per some market observers, after the plunge, the market made a smart recovery in the following days, which may have been a result of heavy buying by the Plunge Protection Team.

Who is on the plunge protection team?

The Plunge Protection Team comprises several top government economic and financial officials. The Secretary of the Treasury heads the group, while the Chair of the Board of Governors of the Federal Reserve, the Chair of the Commodity Futures Trading Commission, and the Chair of the Securities and Exchange Commission, are also part of the team.

Why is the PPT secretive?

The Plunge Protection Team’s meetings or activities aren’t covered by the media, which gives rise to speculations and conspiracy theories about the team. The probable reason behind the secretive nature of its activities is that it reports only to the president. Some observers opine that the team’s role is not only limited to giving recommendations to the president; rather, the team intervenes in the market and artificially props up stock prices.

Critics of the group claim that the members connive with big banks and profit from stock markets by carrying out trades on different stock exchanges when prices decline. They then artificially prop up the prices as part of their market stabilization efforts and profit from their transactions.

When does/have the PPT meet?

Although very little has come out in the mainstream media about the group’s activities, there have been some instances when the team’s meetings were reported. For example, in 1999, the team proposed to congress to incorporate some changes in the derivatives markets regulations. The last reported meeting of the group, at the time of this writing in June 2022, was in December 2018 when Treasury Secretary Steven Mnuchin headed the teleconference with the group’s members. Representatives from the Federal Deposit Insurance Corporation and the Comptroller of the Currency also attended the meeting.

Before the teleconference that took place on December 24, 2018, the S&P 500 and the DJIA had been under pressure for the whole month. But after Christmas, the DJIA and the S&P 500 both recovered and reversed most of the losses in the next few days. Conspiracy theorists attribute the recovery and gains in the indices to the intervention by the Plunge Protection Team.

Final Thoughts

The Working Group on Financial Markets serves an important function: to advise the president on financial markets and economic affairs. Because the exact nature of the group’s activities or recommendations haven’t been made public, some critics of the group blame the group for market intervention and artificially propping up stocks’ prices. However, some market observers believe that the team’s quiet activities are excused as it reports directly to the president.

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