Stocks Surge on Earnings Wins, Best Since 2018

The U.S. stock market is experiencing a significant rally, driven by strong earnings reports from major companies. This surge in earnings has not been seen since 2018, and investors are optimistic about the future prospects of the market. The broad-based rally is not confined to a few sectors or companies, with more than three-quarters of the stocks in the S&P 500 trading above their 200-day moving average, indicating a durable rally. Earnings growth is happening throughout the index, with companies like Netflix (NFLX), Oracle (ORCL), Travelers (TRV), Procter & Gamble (PG), and GE Vernova (GEV) reporting strong results and raising their outlooks.



Netflix, for instance, reported its biggest quarterly subscriber gain in history, buoyed by its first major live sporting events and the return of Squid Game. The streaming giant's shares surged nearly 15% in premarket trading on Wednesday, January 26, 2025, after the announcement. This growth is sustainable as Netflix continues to invest in original content and expand its user base.

Oracle, on the other hand, announced a joint venture with OpenAI and Japan's SoftBank on a $500 billion project to build AI infrastructure in the United States. The software maker's shares were up more than 10% on Wednesday, adding to yesterday's 7% surge. This project is expected to create jobs and stimulate economic growth, further supporting Oracle's earnings.

Travelers, the insurer, reported strong results and raised its outlook, sending its shares up nearly 5% on Wednesday. The company's performance reflects the broader trend of earnings growth across various sectors.

Procter & Gamble, the consumer products giant, added more than 3% to its share price after reporting solid results. The company's strong performance is a testament to the resilience of its brands and the continued demand for its products.

GE Vernova, the energy company, tacked on 1% to its share price after reporting earnings that beat Wall Street estimates. The company's performance reflects the ongoing demand for energy and the continued investment in renewable energy sources.



In summary, the recent surge in earnings is driven by a broad-based rally across various sectors, with companies like Netflix, Oracle, Travelers, Procter & Gamble, and GE Vernova reporting strong results and raising their outlooks. This growth is sustainable, as these companies continue to invest in their businesses and adapt to changing market conditions. However, investors should not expect another year of blockbuster returns like 2024, as the valuation side becomes more challenging as the bull market matures.