NEW YORK — U.S. stock markets concluded a strong week on Friday, marking their most successful week in two months.
The S&P 500 index rose by 1%, securing its first winning week after two prior declines. The Dow Jones Industrial Average increased by 334 points (0.8%), while the Nasdaq Composite saw a notable gain of 1.5%.
The market rally was significantly bolstered by SLB, a company that provides oilfield services, which reported higher-than-expected profits and revenues for the end of 2024. Following these results, its shares surged by 6.1%. Additionally, SLB announced a 3.6% dividend increase and a $2.3 billion stock buyback program, strategies that are likely to enhance investor confidence.
Notably, large technology stocks, collectively known as the “Magnificent Seven” (which includes Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla), all experienced gains. Due to their considerable market size, these tech giants have a significant impact on the S&P 500 and other indices. Recently, however, these stocks had faced scrutiny as investors speculated that their valuations may have inflated after their years of market leadership. This concern was amplified due to rising Treasury yields, which can adversely affect prices of high-value investments.
The week saw a positive impact on stocks following an encouraging report on U.S. inflation, stoking optimism that the Federal Reserve could consider more interest rate cuts in the near future. If such cuts are implemented, they could help stimulate the economy and bolster investment values, although they carry the risk of igniting inflationary pressures.
Recently, Wall Street has experienced volatility as various economic reports have reshaped trader expectations regarding the Fed’s monetary policy. Declines in inflation fears led to a drop in Treasury yields and an uptick in stock prices, while concerns about inflation have provoked the opposite trend.
Market movements this week saw Treasury yields decrease substantially, with the 10-year Treasury yield dropping to 4.61% on Friday, down slightly from Thursday’s 4.62% and significantly below last week’s 4.76%.
Despite favorable inflation data, skepticism remains on Wall Street about the potential for additional rate cuts. Economists at Bank of America expressed in a recent report that given the current stable condition of the U.S. economy, it may be prudent to maintain the existing framework.
They also highlighted potential uncertainties arising from “Trumponomics 2.0” under an incoming Trump administration, which could exacerbate inflation due to proposed tariffs and tax cuts aimed at an already expanding economy.
Various asset classes, including stocks and cryptocurrencies, have experienced volatility amidst these economic uncertainties, reflecting a blend of optimism for corporate profits and concerns about an escalating government deficit and inflation pressures.
In a potential boost for financial institutions, Wall Street expects banks to be significant beneficiaries of a second Trump term, driven by a potential economic uptick and reduced regulatory measures. Notably, shares of Truist Financial climbed by 5.9% after reporting better-than-anticipated profits for the end of 2024. This follows a trend seen among larger banks like Wells Fargo and Citigroup, which also exceeded analyst expectations.
In contrast, smaller regional banks displayed mixed performances; Regions Financial saw a slight decline of 1.3%.
Among the S&P 500, J.B. Hunt Transport Services faced the largest decline, plummeting by 7.4% after reporting profits that fell short of expectations, impacted by rising equipment and insurance costs.
Overall, the S&P 500 rose by 59.32 points, closing at 5,996.66, while the Dow Jones Industrial Average jumped by 334.70 points to settle at 43,487.83. The Nasdaq composite also enjoyed a substantial increase of 291.91 points, reaching 19,630.20.
Internationally, European markets witnessed a rally after mixed results in Asian markets. In China, indexes appreciated slightly, buoyed by reports indicating that the country’s economy grew by 5% annually, aligning with government targets but slowing since the previous year.
Concerns remain regarding future growth predictions for China and the impact of U.S. trade policies, including potential tariff increases on Chinese imports. In Japan, the Nikkei 225 fell by 0.3%, influenced by a 4.3% drop in Nintendo shares in response to their new console announcement. The company indicated further details would be released about the Switch 2 in April, with a scheduled release later this year.
