Stocks Off To A Good Start This Week, AI Data Center Project 'Stargate' Announced After The Close Yesterday Stocks closed sharply higher yesterday, continuing the momentum from last week. Of the big three indexes, the Dow was the top performer with a gain of 1.24%, beating S&P 500's 0.88% and the Nasdaq's 0.64%. But it was the small-cap Russell 2000 that led the way with an outsized gain of 1.85%, followed by the mid-cap S&P 400 with 1.64%. Relief after last week's better-than-expected inflation reports got the party started. Then better-than-expected bank earnings to kick off earnings season fueled the rally even more. There's also a high degree of optimism that the new Trump Administration will be focused on a pro-growth agenda. In other news, earnings season picked up steam this week. Before the open we got positive EPS surprises from 3M (1.20% positive EPS surprise), Charles Schwab (12.2% positive EPS surprise) and D.R. Horton (8.75% positive EPS surprise). 3M gained 4.16% yesterday, Schwab added 5.92%, although D.R. Horton was off -2.68%. After the close Netflix posted a positive EPS surprise 1.67% and a positive sales surprise of 1.29%. That translated to a quarterly EPS growth rate of more than 102% vs. this time last year, and a sales growth of 16.1%. They were up 1.35% in the regular session before earnings, and soared more than 14% in after-hours trade following earnings. United Airlines reported after the close as well, posting a positive EPS surprise of 8.31%, and a positive sales surprise of 2.13%. That equated to a quarterly EPS growth rate of 63.0% vs. this time last year, and a sales growth of 7.85%. They were up 2.92% in the regular session, and were trading higher by 3.70% in after-hours. We also heard from Seagate Technology after the close, and they posted a positive EPS surprise of 7.98%, and a positive sales surprise of 0.64%. That came out to a quarterly EPS growth rate of more than 1,500% vs. this time last year ($2.03 this qtr. vs. just 12 cents 4 quarters ago), and a sales growth of 49.5%. They were up 3.67% in the regular session, and 4.42% after-hours. We'll get more earnings today with a total of 93 companies on deck. Late in the afternoon, President Trump held a press conference with Sam Altman (OpenAI), Larry Ellison (Oracle), and Masayoshi Son (Softbank), and announced project Stargate, which will build AI data centers in the U.S. The initial investment is for $100 billion for an AI datacenter in TX. And could expand to other states and another $400 billion more over the next 4 years. The project is being called the "largest AI infrastructure project in history." Afterwards, President Trump answered questions, and the topic of tariffs came up. While he didn't sign any executive orders regarding tariffs on Monday after his inauguration, he hinted yesterday that he could impose them on Canada and Mexico as early as February 1. Some of the news stories earlier in the day suggested that Mr. Trump not signing any executive orders on tariffs yet helped lift stocks yesterday. So it will be interesting to see how trading goes today given that tariffs were finally mentioned later in the afternoon. But talking about tariffs are different than implementing them. Moreover, none of this is new news to the market, as Mr. Trump had talked about them repeatedly on the campaign trail. But we'll have to see. In the meantime, stocks continue to add to their 2025 gains. We'll see if they can do the same again today. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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