NEW YORK — U.S. stock markets are on the rise this Friday, heading toward what is expected to be their best week in two months.
In early trading, the S&P 500 increased by 0.9%, looking to secure its first winning week in three attempts. Meanwhile, the Dow Jones Industrial Average climbed 308 points, representing a 0.7% gain, while the Nasdaq composite saw a 1.5% rise.
Truist Financial shares surged by 4.6% after the bank reported stronger-than-anticipated profits for the last quarter of 2024. The institution noted a 1.5% rise in its average deposits during the period, aligning with positive earnings reports from larger competitors like Wells Fargo and Citigroup.
Conversely, some smaller regional banks showcased a mix of financial results on Friday.
The significant upward momentum in the markets primarily stemmed from large tech stocks. All companies within the so-called “Magnificent Seven,” which includes names like Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla, saw their shares rise by at least 1%. Given their significant market weight, their performance significantly influences not only the S&P 500 but other major indices as well.
However, the Magnificent Seven has recently faced scrutiny due to concerns that their stock valuations may have become excessively high after leading the market for years. This anxiety escalated following a rise in Treasury yields in the bond market over recent weeks. Increasing yields tend to negatively impact prices across various investment types, with the most expensive stocks bearing the brunt of that pressure.
Overall, the stock market got a boost this week from a positive inflation report, which heightened optimism that the Federal Reserve might be able to implement further interest rate cuts later this year. Such reductions, which began in September, could stimulate the economy and elevate investment prices, although they may also risk rekindling inflation.
In response to this, Treasury yields saw a significant decline, with the 10-year Treasury yield dropping to 4.60% from 4.62% late Thursday and 4.76% a week prior.
Despite this week’s encouraging inflation data, some investors on Wall Street remain doubtful that the Fed will provide any additional relief via interest rate reductions this year.
In individual stock movements, J.B. Hunt Transport Services fell by 6% after its profits for the recent quarter disappointed analysts. The company’s earnings were impacted by increased equipment and insurance costs.
On the contrary, SLB experienced a 5.9% surge after exceeding expectations for both profits and revenue, alongside a 3.6% dividend increase. The company also announced an expedited program to return $2.3 billion to investors through stock buybacks.
International markets exhibited a positive trend, with European indices rising after a mixed review in Asia.
Chinese stock markets edged up following reports that the nation’s economy grew at a 5% annual rate last year, achieving government targets despite a slowdown compared to the previous year. The Chinese government attributed this growth to robust exports and initiatives designed to enhance consumer spending and investment, leading to nearly a 6% uptick in manufacturing year-over-year.
In Hong Kong, stocks rose 0.3%, while Shanghai saw a 0.2% increase. However, economists predict a continuation of slowing growth this year and beyond, compounded by the challenges posed by President-elect Donald Trump’s threats to impose higher tariffs on Chinese goods, as well as a series of U.S. actions aimed at limiting China’s access to advanced technologies, including AI-related computer chips.
In Tokyo, the Nikkei 225 index declined by 0.3%, influenced by a 4.3% drop in Nintendo shares following the announcement of their new console, with more detailed information about the Switch 2 expected to be released in April along with its anticipated launch this year.
