NEW YORK — U.S. stock markets concluded their strongest week in two months with a surge on Friday.
The S&P 500 rose 1.2% during afternoon trading, positioning itself for a winning week after two consecutive losses. The Dow Jones Industrial Average increased by 454 points, or 1.1%, during the same period, while the Nasdaq composite climbed by 1.8%.
A significant contributor to the market’s upswing was SLB, which provides services to oilfields. The company reported higher-than-expected profits and revenues for the end of 2024, leading its shares to jump by 7.5%. SLB also announced a 3.6% increase in its dividend and revealed plans to return $2.3 billion to shareholders via stock buybacks.
The most substantial gains were driven by major technology firms, often referred to as the “Magnificent Seven,” which include Alphabet, Amazon, Apple, Microsoft, Meta Platforms, Nvidia, and Tesla. Due to their enormous size, their performance significantly impacts the S&P 500 and other indexes compared to smaller companies.
Recently, these tech giants have faced scrutiny due to concerns that their stock prices had escalated too quickly after a long period of market leadership. Such concerns were exacerbated by rising Treasury yields in the bond market, which typically hurt investment prices, especially for those perceived as overpriced.
However, the stock market received a boost this week from a positive report on inflation, which has fueled speculation that the Federal Reserve might enact additional interest rate cuts this year. Such cuts, which began in September, could help stimulate the economy and increase investment prices, although there’s a risk these measures could ignite further inflation.
Wall Street has experienced fluctuating movements recently as economic reports have altered traders’ expectations about the Fed’s monetary policy decisions. A decrease in inflation worries has led to falling Treasury yields and increasing stock prices, but a resurgence in inflation concerns has produced the opposite effect.
This past week, Treasury yields dropped significantly, with the yield on the 10-year Treasury note slightly declining to 4.61% from 4.62% the previous day and down from 4.76% a week earlier.
Despite favorable inflation data this week, some analysts on Wall Street remain cautious about prospects for further rate cuts. Economists at Bank of America stated that with the U.S. economy showing strong resilience, “you shouldn’t fix what’s not broken.”
They highlighted uncertainties surrounding “Trumponomics 2.0.” Under policies suggested by President-elect Donald Trump, there could be upward pressure on inflation due to potential widespread tariffs and tax cuts, especially for an economy that is already performing well.
Market prices across various investments, including stocks and cryptocurrencies, have fluctuated following the Election Day optimism amid ongoing uncertainties. While there are positive expectations for corporate profits and increased crypto acceptance, there are also concerns over a growing U.S. government deficit and inflationary pressures.
Banks are viewed as potential major beneficiaries of a second Trump term. Alongside expectations for a more robust economy that could enhance lending profits, investors anticipate that a second term would bring reduced regulatory scrutiny for banks.
Truist Financial shares climbed by 4.9% on Friday after reporting profits that exceeded analysts’ expectations for the end of 2024. The bank noted a 1.5% rise in average deposits for the quarter after similar strong profit results from major banking competitors, including Wells Fargo and Citigroup.
Other regional banks had mixed outcomes reported on Friday, with Regions Financial seeing a decline of 0.8%. In contrast, J.B. Hunt Transport Services experienced the largest drop in the S&P 500, plummeting by 6.2% after missing profit expectations for the latest quarter, largely due to rising equipment and insurance costs.
Internationally, stock markets in Europe enjoyed a rally after varied performances in Asian markets. Chinese stock indexes gained modestly as the government announced a 5% annual growth rate for its economy last year, achieving its target but reflecting a slowdown from the previous year. Economists predict a continuous deceleration of growth in the coming years. Additionally, Trump’s suggestions to increase U.S. tariffs on Chinese goods are contributing to challenges for Beijing, particularly regarding limited access to advanced technology, including AI-related computer chips.
In Asian markets, stocks increased by 0.3% in Hong Kong and 0.2% in Shanghai. Meanwhile, Japan’s Nikkei 225 index dipped 0.3%, with Nintendo shares dropping 4.3% following the announcement of its upcoming console, the Switch 2, which is expected to be detailed further in April before its release later this year.
