U.S. Stock Market Outlook | AI and Quantum Computing Concept Stocks Surge

1. As of January 22 (Wednesday) before the US stock market opens, the three major US stock index futures are all up. As of the time of writing, Dow futures are up 0.16%, S&P 500 futures are up 0.44%, and Nasdaq futures are up 0.84%.

1. As of the time of writing, the German DAX index is up 1.19%, the UK FTSE 100 index is up 0.41%, the French CAC40 index is up 0.88%, and the Euro Stoxx 50 index is up 0.91%.

1. As of the time of writing, WTI crude oil is up 0.47%, priced at $76.19 per barrel. Brent crude oil is up 0.44%, priced at $79.64 per barrel.

Market News

Sell US tech stocks, increase holdings in Chinese stocks! The contrarian investment strategy of the $1.8 trillion sovereign wealth fund leader. Nicolai Tangen, head of Norway's $1.8 trillion sovereign wealth fund, stated that investors willing to go against the market in the coming months should consider selling US tech stocks and private credit while increasing their holdings in Chinese stocks. Tangen said in an interview during the World Economic Forum in Davos on Wednesday, "What would you do today? Well, if you want to do the opposite of others, that would be to sell US tech stocks, buy Chinese stocks, sell private credit, and only buy outdated things." He admitted that this is "very, very difficult to do because if you go against the trend and differ from the benchmark, there will be periods of underperformance, and everyone will question your sanity," said the executive.

A scale of up to $500 billion! Trump announces the "Stargate" AI infrastructure project led by OpenAI, SoftBank, and Oracle. US President Trump appeared at the White House with OpenAI CEO Sam Altman, SoftBank CEO Masayoshi Son, and Oracle (ORCL.US) Chairman Larry Ellison to announce that the private sector will make large-scale investments in US artificial intelligence (AI) infrastructure. Trump announced an AI infrastructure investment plan called "Stargate." Trump stated that these three companies will each invest $100 billion as initial funding, and the investment amount will increase to $500 billion over the next four years, starting from a data center in Texas, USA. Trump stated that the Stargate project will build physical and virtual infrastructure to power the next generation of AI, including data centers across the country. AI concept stocks surged collectively, with Oracle (ORCL.US) and Rezolve AI (RZLV.US) rising over 9%, and C3.ai (AI.US) and Arm Holdings (ARM.US) rising over 5% Palantir (PLTR.US) rose over 2%.

Deutsche Bank: If the U.S. imposes a 25% tariff on imports from Canada and Mexico, the inflation indicator favored by the Federal Reserve may rise by 1.4%. On Monday, Trump stated that he might impose a 25% tariff on imports from Canada and Mexico as early as February. According to data from the U.S. Census Bureau, in November 2024, Mexico and Canada are the two largest trading partners of the U.S., accounting for 15.4% and 13.8% of total trade, respectively. In response, Deutsche Bank stated: "At that time, most people thought this was a negotiation tactic. However, the last-minute extension of negotiations for the 25% tariff indicates that we should take this threat more seriously, even though there is still time to reach an agreement. Imports from Canada and Mexico account for about 4.7% of overall personal consumption expenditures and 5.4% of core consumption expenditures in the U.S. If the additional 25% tariff permeates all stages of production, the core PCE price level is expected to increase by 1.4% (5.4% multiplied by 25%)."

The market calmly faces Trump's return to the White House, while the Bank of Japan moves towards interest rate hikes. Following a relatively calm reaction from global financial markets to Trump's return to the White House, the Bank of Japan is expected to raise interest rates to the highest level since 2008 this Friday. Sources revealed earlier this month that before Trump's inauguration, Bank of Japan officials believed that unless Trump's return brought too many negative surprises, the likelihood of an interest rate hike was high. Additionally, sources indicated that Japanese government officials would also support the Bank of Japan's actions this week after Trump's inauguration. If the Bank of Japan announces an interest rate hike on Friday as the market expects, it will be the third rate hike in less than 12 months. Before March of last year, the Bank of Japan had not raised rates for 17 years. Currently, the Bank of Japan is steadily moving towards normalizing monetary policy, while the Federal Reserve and the European Central Bank are contemplating pausing their easing cycles.

Individual Stock News

Johnson & Johnson (JNJ.US) Q4 earnings exceed expectations. Johnson & Johnson reported strong performance in the fourth quarter, with a Non-GAAP earnings per share of $2.04, surpassing last year's $2.02 and also exceeding market expectations of $2.01. The company's fourth-quarter revenue reached $22.5 billion, a year-on-year increase of 5.1%, up $50 million from the same period last year, exceeding market expectations of $22.43 billion. Additionally, Johnson & Johnson is optimistic about its full-year performance in 2025, expecting adjusted earnings per share to be between $10.75 and $10.95, higher than the market expectation of $10.59. The company anticipates full-year revenue in 2025 to be between $90.9 billion and $91.7 billion, close to the market expectation of $90.99 billion.

Netflix (NFLX.US) Q4 earnings report exceeds expectations, paid subscriber count surpasses 300 million. Netflix announced that its paid subscriber count surpassed 300 million in the fourth quarter, with a record addition of 19 million new users. The company stated that this growth was driven by high-quality content, product improvements, and the usual seasonal growth in the fourth quarter. Netflix's performance for the quarter ending December 31 exceeded market expectations, with earnings per share of $4.27, higher than the expected $4.20; Revenue reached $10.25 billion, exceeding the expected $10.11 billion; the number of paid subscribers reached 301.63 million, surpassing the expected 290.9 million. The company's net income grew from $938 million in the same period last year to $1.87 billion, doubling year-on-year. Fourth-quarter revenue grew 16% year-on-year to $10.25 billion, above market expectations. Netflix raised its full-year revenue forecast for 2025 to $43.5 billion to $44.5 billion, about $500 million higher than the previous forecast.

Good news again for the U.S. airline industry! United Continental Airlines (UAL.US) Q4 performance exceeded expectations, with travel demand remaining strong. United Continental Airlines' Q4 revenue grew 8% year-on-year to $14.7 billion, better than market expectations, mainly due to a 20% increase in basic economy class sales and a 10% increase in premium fares; adjusted earnings per share rose to $3.26, exceeding the market expectation of $3.05. United Continental Airlines expects Q1 2025 profits to significantly exceed Wall Street's expectations as the company fully capitalizes on the exceptionally strong demand for premium and international travel. United Continental Airlines expects adjusted earnings per share for Q1 to be between $0.75 and $1.25, while analysts' previous average expectation was $0.56. United Continental Airlines also expects full-year adjusted earnings per share to be between $11.50 and $13.50, with analysts' average estimate at $12.84.

Client trading volume and commission income surged, with Interactive Brokers (IBKR.US) Q4 revenue and profit exceeding expectations. Automated global electronic broker Interactive Brokers announced its Q4 financial results after the market closed on January 21, Eastern Time. The data showed that the quarterly revenue was $1.387 billion, exceeding analysts' average expectation of $1.29 billion, with adjusted earnings per share of $2.03, surpassing the analysts' expectation of $1.73 by $0.30. Driven by increased client trading volume, commission income grew 37% year-on-year to $477 million. Client options and stock trading volumes surged by 32% and 65%, respectively, while futures trading volume decreased by 3%. Driven by an increase in average client margin loans and client credit balances, net interest income grew 11% to $807 million. In the fourth quarter, the company's client accounts grew 30% year-on-year to 3.34 million, and client equity assets increased by 33% to $568.2 billion.

SoftBank's stock price saw its largest increase in nearly five months! Partnering with Oracle (ORCL.US), OpenAI, and others to invest $100 billion in AI infrastructure. SoftBank Group announced it will collaborate with OpenAI, Oracle (ORCL.US), and Abu Dhabi-backed MGX on a project named "Stargate," which aims to build $500 billion worth of data centers and infrastructure in the United States. Subsequently, SoftBank's stock surged by 12% in the Japanese market, marking the largest single-day increase since last August, while Oracle and SoftBank's chip design company Arm Holdings (ARM.US) also saw significant gains in U.S. stocks Weak sales drag down Apple (AAPL.US) stock price, NVIDIA (NVDA.US) regains title of global market value "king." On Tuesday, Apple's stock price continued to decline, extending its recent downward trend, while NVIDIA's (NVDA.US) stock began to "overtake" Apple, once again becoming the highest valued player in the global stock market. In Tuesday's U.S. stock trading, NVIDIA's market value surpassed $3.46 trillion, exceeding Apple's market value of $3.33 trillion. As of the time of writing, NVIDIA rose 1.68% to $143.2 in after-hours trading, while Apple fell 2.7% to $222.03, although the latter has moved away from its previous low. The AI chip manufacturer NVIDIA's market value had surpassed Apple's in early November last year, but Apple regained the top position later that month. On December 26 last year, Apple's stock price hit a historic high of $260.10, but has since fallen about 15%.

Honeywell (HON.US) subsidiary Quantinuum plans to build a research and development center, U.S. quantum computing stocks surge in response. Honeywell's quantum software division, Quantinuum, announced the establishment of a new R&D center in New Mexico, prompting a surge in U.S. quantum computing stocks. Quantinuum stated that the planned center will focus on photonics technology, which will help advance trapped ion quantum computing technology. Quantinuum President and CEO Rajeeb Hazra stated, "As a leader in the field of quantum computing, Quantinuum has found an ideal partner in New Mexico. The state's vibrant technology ecosystem and skilled workforce align perfectly with our strategic goals."

Important Economic Data and Event Forecasts

Beijing time 23:00: U.S. December Conference Board Leading Indicators MoM (%).

Beijing time 23:05: European Central Bank President Lagarde delivers a speech.

Next day Beijing time 5:30: U.S. API crude oil inventory change for the week ending January 17 (10,000 barrels).

Earnings Forecast

Thursday morning: Alcoa (AA.US)

Thursday pre-market: Union Pacific (UNP.US), American Airlines (AAL.US), TAL Education Group (TAL.US)