U.S. stocks went up on Friday after a tough week, thanks to a good inflation report and some soothing comments from the Federal Reserve (the Fed). The latest report showed that prices went up by 2.4% in November compared to the year before, which is a bit better than what experts expected. People are still spending money, which is a sign that the economy is doing okay. After this news, investors started to think the Fed might cut interest rates sooner than they thought, likely starting in March 2025.
Earlier in the week, the Fed had announced its third interest rate cut of the year but said there would only be two more cuts next year instead of four. This made investors nervous at first, causing stocks to drop. On Friday, however, things turned around: with every major stock index going up, the Dow Jones rose by nearly 500 points, marking its best day since November 6.
Despite the Friday bounce, all three major U.S. indexes dropped for the week. The tech-heavy Nasdaq was particularly affected, ending a four-week streak of gains. All groups of stocks went up in Friday’s rally, with real estate leading the way. Small companies, measured by the Russell 2000 index, also saw their stocks rise.
Investors were also keeping an eye on the U.S. Congress, which was rushing to prevent a partial government shutdown. Overall, many more stocks went up than down on the New York Stock Exchange and the Nasdaq. Friday saw a lot of trading activity, partly because of the end of some stock contracts, known as triple witching, where 21.58 billion shares changed hands.
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