NEW YORK — The U.S. stock markets wrapped up a strong week, marking the best performance in two months as trading concluded on Friday.
The S&P 500 was up 1.1% in late-day trading, poised for its first weekly gain in three weeks. The Dow Jones Industrial Average increased by 359 points, equivalent to 0.8%, while the Nasdaq composite rose by 1.6% with just an hour left in trading.
A significant contributor to the market rally was SLB, a company providing services to oilfields, which surpassed analysts’ expectations with higher profits and revenues for the end of 2024. Following this positive report, SLB’s shares surged by 6.4% after announcing a 3.6% increase in its dividend and a plan to return $2.3 billion to shareholders through stock buybacks.
Big Tech stocks played a vital role in the market’s upward trend, with all seven members of the so-called “Magnificent Seven”—Alphabet, Amazon, Apple, Microsoft, Meta Platforms, Nvidia, and Tesla—experiencing gains. Due to their substantial market capitalizations, these companies notably influence the S&P 500 and other indexes.
Despite recent pressure on Big Tech stock valuations due to concerns regarding over-inflated prices, the market found new momentum this week, spurred by a promising inflation report. This led to renewed speculation that the Federal Reserve might implement additional cuts to interest rates during the year. Such cuts, which were initiated in September, could stimulate economic activity and enhance investment yields, though they might also exacerbate inflationary pressures.
In recent weeks, Wall Street has experienced fluctuations as economic updates have caused traders to adjust their forecasts about Fed interest rate strategies. A decrease in concerns about inflation resulted in falling Treasury yields and rising stock prices, while growing fears about inflation produced a contrasting response.
As Treasury yields declined sharply this week, the 10-year yield settled at 4.61% on Friday, a fall from 4.62% late Thursday and down from 4.76% a week earlier.
Despite the week’s positive inflation reading, skepticism remains on Wall Street about further rate cuts. Economists from Bank of America expressed that the U.S. economy’s solid condition suggests that “you shouldn’t fix what’s not broken.” They also referenced uncertainties stemming from prospective economic policies under President-elect Donald Trump, which may raise inflation expectations, given anticipated tax cuts and tariffs.
Market volatility has characterized various investments, including stocks and cryptocurrencies, since the Election Day surge, amidst uncertainties. While there are expectations for enhanced corporate profits and wider crypto acceptance, concerns persist regarding a potential increase in the U.S. government deficit and inflationary pressures.
Banks are often viewed as potential winners under a second Trump administration, benefiting from economic growth that could enhance lending profits and expectations of less regulatory scrutiny. Truist Financial shares rose by 5.6% on Friday, following better-than-expected profit reports for the end of 2024, with average deposits up by 1.5% over the quarter. This follows strong earnings announcements from major banks like Wells Fargo and Citigroup.
However, some regional banks posted mixed results. For instance, Regions Financial’s shares fell by 1.2%.
Among the notable losses, J.B. Hunt Transport Services saw a decline of 6.5%, marking the largest drop in the S&P 500 after it failed to meet analysts’ profit expectations for the most recent quarter, primarily due to rising costs in equipment and insurance.
Elsewhere in global markets, European indices enjoyed gains after mixed results in Asia. In China, modest increases were noted as authorities reported a 5% annual growth rate last year, achieving the government’s target but indicating a slowdown compared to previous years. Anticipation of further economic deceleration, coupled with Trump’s proposed tariffs on Chinese imports, adds to the pressure facing Beijing as it navigates restrictions from Washington on crucial technologies like AI-related computer chips.
In the Asian markets, Hong Kong stocks rose by 0.3%, while Shanghai saw a 0.2% increase. However, in Tokyo, the Nikkei 225 index declined by 0.3%, with Nintendo shares falling by 4.3% following the announcement of its new console, the Switch 2, with more details promised in April.
