U.S. stocks bounced back on Friday, recovering from a tough week. Investors are hopeful for the new year, expecting the Federal Reserve to cut interest rates and the new administration to ease rules. All three major U.S. stock indexes rose, with big tech companies like Tesla and Nvidia leading the charge, especially lifting the tech-heavy Nasdaq index. Although stocks went up, all indexes saw small drops over the week, with the S&P 500 facing its third loss in four weeks. Despite some recent selling, this past year was great for stocks, especially with advances in artificial intelligence and the Fed’s first rate cuts in three-and-a-half years. Analysts like Ryan Detrick noted that the market was looking oversold but saw new buyers coming in, hoping for a positive trend as many big investors return next week.
On the economic side, a report from the Institute for Supply Management (ISM) showed that manufacturing is improving, suggesting possible growth. Some strong economic data is making people question if the Fed needs to cut rates again, as it could add inflation pressure. Richmond Fed President Thomas Barkin expressed a positive outlook for the U.S. economy in 2025, despite the uncertainty from the upcoming Trump administration.
As the new Congress met for the first time on Friday, President-elect Donald Trump will be sworn in on January 20. His plans, like cutting corporate taxes and reducing regulations, might help businesses but could also increase inflation.
The Dow Jones Industrial Average went up by 339.86 points, closing at 42,732.13. The S&P 500 rose 73.92 points to 5,942.47, and the Nasdaq Composite increased by 340.88 points, reaching 19,621.68. All 11 major groups in the S&P 500 saw gains, with consumer discretionary stocks leading the way after a rough Thursday. Analysts expect a 9.6% growth in S&P 500 earnings for the year.
In business news, President Joe Biden blocked a $14.9 billion sale of U.S. Steel to Japan’s Nippon Steel over national security worries, causing U.S. Steel’s shares to fall 6.5%. Microsoft shares increased by 1.1% after announcing an $80 billion investment in AI data centers for 2025. Alcohol stocks dipped after the U.S. Surgeon General suggested alcohol should have cancer risk labels.
Overall, more companies’ stocks rose than fell, and trading volume was 14.09 billion shares—slightly below the recent average.
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