This article was written by CoinCodex.
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U.S. stocks rebounded as the S&P 500 rose to 6,976 points. Benchmark indexes closed just below their all-time highs, helped by improved corporate earnings sentiment and renewed interest in AI stocks. Meanwhile, Bitcoin continued to underperform, increasing selling pressure as capital flows favored traditional assets.
AI stocks and small-cap stocks drive S&P 500 higher
The last bullish leg for the S&P 500 Led by large technology companies and semiconductor sector securitiesThat’s as investors returned to AI bets after a brief hiatus due to valuation concerns. Alphabet hit a record high, Amazon rose ahead of its earnings report and chipmakers posted broad-based gains on rising demand expectations.
Small-cap stocks outperformed large-cap stocks. The Russell 2000 rose about 1% on the session. Moreover, by 2026, it has increased by more than 6%. This relative strength is usually interpreted as a sign of confidence in domestic economic growth. It also confirms stock market forecasts pointing to the potential for further gains as long as earnings momentum continues.
It is profits, not valuations, that support stock price increases.
Business performance continues to be the main support for market progress. analyst They currently expect S&P 500 companies to grow about 11%. It made a profit in the December quarter. The previous forecast was close to 7% at the beginning of January.
A recent study found that earnings growth explained about 84% of the S&P 500’s total return in the current cycle, marking a change from the previous year, when multiple expansions were more important. This change alleviates concerns about an AI bubble, as profits and cash flow support price increases.
Macroeconomic conditions maintain risk appetite
The macro environment continues to support risk-taking in the stock market. US GDP growth rate is close to 3.3%inflation remains subdued and productivity indicators show improvement. Political turmoil, including a partial federal government shutdown that delayed the release of some important data, has not had a major impact on market sentiment.
Major US indexes recorded gains Like the S&P 500, the Dow Jones Industrial Average rose more than 1% and the Nasdaq Composite Index rose about 0.6%. Investors are now awaiting new macroeconomic benchmarks and signals from the Federal Reserve confirming that financial conditions remain favorable.
Bitcoin price decline strengthens market divergence
While the stock market rose, the cryptocurrency market moved in the opposite direction. Bitcoin prices fell to $63,500, the lowest in nearly two years, extending a broader bearish trend weighing on the digital asset. The decline occurred under the following circumstances: A situation of loss of momentum, reduced appetite for speculation, and turnover of funds into assets with visible corporate profits.
This contrast highlights the growing disconnect between traditional risk assets and cryptocurrencies in the short term. Both can benefit from a favorable liquidity environment, but performance-oriented assets have an advantage in the current climate.
