U.S. stock markets had a big win on Friday as investors felt hopeful about the economy and what will happen with interest rates as Donald Trump gets ready to take office. The S&P 500 and Dow Jones saw their largest weekly gains since early November, and the Nasdaq did well too.
Good news this week showed that inflation is not a big worry right now, and many think the Federal Reserve might lower interest rates sooner than they expected. On Friday, the Commerce Department shared that single-family home construction hit a 10-month high. However, rising mortgage rates and a lot of new homes could make it tough for buyers.
With Trump being inaugurated next week when the stock market will be closed for Martin Luther King Jr. Day, many are curious about how his policies might change things. Some investors are concerned that Trump’s plans, like new tariffs, could lead to inflation, which might slow down the Fed from cutting rates.
Despite this uncertainty, strong earnings results from big banks helped lift stock prices this week. Jim Baird from Plante Moran Financial Advisors noted, “We’re starting the year on a better footing than we have in the last few years.”
By the end of the day, the Dow Jones climbed by 334.70 points, reaching 43,487.83; the S&P 500 gained 59.32 points to 5,996.66; and the Nasdaq went up by 291.91 points to 19,630.20. Overall, the Dow went up by 3.69% over the week, the S&P by 2.92%, and the Nasdaq by 2.43%.
The yield on the 10-year U.S. government bond increased slightly to 4.619% but is down from a higher rate earlier this week. Cleveland Fed President Beth Hammack noted that inflation is still a concern, but Fed Governor Christopher Waller suggested that rates could be cut sooner than many thought.
The markets expect that the Fed will keep rates where they are in their next meeting, with a good chance of a cut by June. Most sectors in the S&P 500 had positive results, especially consumer stocks, which rose by 1.7%. However, healthcare and real estate struggled.
Companies like Nvidia and Broadcom saw their stock prices go up after Barclays raised its price targets. Intel’s shares soared by 9.25% due to rumors about a possible takeover, and Qorvo’s stocks jumped by 14.43% after an activist investor took a stake in the company. On the other hand, social media stocks like Meta had a small reaction to a legal decision against TikTok; Meta went up slightly while Snap went down.
Overall, there were more winning stocks than losing ones, with advancing stocks outnumbering decliners on the NYSE by 2.16-to-1 and on the Nasdaq by 1.73-to-1. The S&P 500 saw 24 new highs this week while the Nasdaq had 66.
Trading volume was lower than normal, with 14.57 billion shares changing hands compared to an average of 15.65 billion over the last 20 trading days.
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