NEW YORK — On Friday, U.S. stock indices wrapped up a successful week, marking their best performance in two months.
The S&P 500 surged by 1%, marking its first weekly gain after two consecutive losses.
The Dow Jones Industrial Average edged up by 334 points, or 0.8%, while the Nasdaq composite soared by 1.5%.
The market was notably buoyed by SLB, a service provider for oilfields, which reported stronger-than-expected profits and revenues for the end of 2024.
Its stock jumped by 6.1% following the announcement of a 3.6% increase in dividends and a plan to return $2.3 billion to shareholders through stock buybacks.
Big Tech stocks played a significant role in driving the market upward.
All members of the so-called “Magnificent Seven,” which include Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla, saw gains.
Due to their substantial market capitalizations, their stock movements have a pronounced impact on the S&P 500 and other indices.
Recently, the Magnificent Seven faced scrutiny amid concerns that their stock prices had escalated too quickly after consistently outperforming the market for years.
Growing apprehensions arose following an increase in Treasury yields in the bond market, as higher yields negatively affect investment prices, particularly for those perceived as overvalued.
However, this week saw an uplift in stock prices, driven by a positive report on U.S. inflation that sparked optimism about potential interest rate cuts from the Federal Reserve later this year.
Such cuts, which began in September, could relieve some economic pressure and enhance investment values, though they may also exacerbate inflation concerns.
In recent weeks, Wall Street has experienced volatile swings as economic reports prompted traders to reassess their expectations regarding Federal Reserve actions on interest rates.
Decreased fears related to inflation have led to lower Treasury yields and rising stock prices, while increasing concerns have had the opposite effect.
Treasury yields dropped noticeably this past week, with the 10-year Treasury yield declining further on Friday to 4.61%, down from 4.62% on Thursday and significantly lower than 4.76% a week prior.
Despite this week’s favorable inflation data, some analysts on Wall Street remain cautious about the likelihood of further interest rate reductions.
They argue that with the U.S. economy in a relatively stable condition, there’s a case for leaving things unchanged.
Additionally, uncertainties surrounding “Trumponomics 2.0” may introduce new inflationary pressures due to policies such as extensive tariffs and tax cuts.
Amid fluctuating investment prices in various sectors, from stocks to cryptocurrencies, market participants are torn between the anticipation of stronger corporate profits and the potential for increased inflation coupled with a growing U.S. government deficit.
In the banking sector, Wall Street expects banks to benefit from a second Trump administration, where a stronger economy could enhance lending profits, and less regulatory pressure could further boost their operations.
Truist Financial saw a notable increase of 5.9% after reporting better-than-expected profits for the end of 2024, citing a 1.5% increase in average deposits during the quarter, following similar positive trends from major competitors like Wells Fargo and Citigroup.
Conversely, regional banks displayed mixed performance, with Regions Financial experiencing a decline of 1.3%.
J.B. Hunt Transport Services suffered a significant drop of 7.4% after failing to meet profit expectations for the quarter, impacted by rising costs related to equipment and insurance.
Overall, the S&P 500 closed with a rise of 59.32 points at 5,996.66, the Dow Jones Industrial Average increased by 334.70 points to 43,487.83, and the Nasdaq composite jumped by 291.91 points to 19,630.20.
In global markets, European indices saw gains following a mixed performance in Asia.
Chinese markets experienced modest increases after it was reported that the economy grew at an annual rate of 5%, achieving the government’s target, though reflecting a slowdown compared to the previous year.
In Hong Kong and Shanghai, stock indexes climbed by 0.3% and 0.2%, respectively.
However, experts predict a continued slowdown in growth for China, compounded by Trump’s plans to raise tariffs on Chinese imports, which further complicate Beijing’s economic challenges amid stricter access to advanced technologies like AI-related computer chips.
In Tokyo, the Nikkei 225 saw a minor decline of 0.3%, largely due to a 4.3% drop in Nintendo’s shares following the announcement of its latest console, the Switch 2, set to be released later this year.
