Wall Street ended sharply higher on Friday, driven by gains from megacap growth companies such as Tesla and Nvidia. The Dow Jones Industrial Average rose 0.80%, the S&P 500 gained 1.26%, and the Nasdaq Composite surged 1.77%. Despite modest declines for the week, investors are optimistic about the new year’s prospects.
The rebound comes after a banner year for equities, fueled by artificial intelligence technology and the Federal Reserve’s rate cuts. The Institute for Supply Management’s manufacturing PMI hit its highest reading since March, with a surprise gain of 0.9 point to 49.3, nudging ever closer to expansion territory.
However, economists caution that robust economic data may lead to further interest rate cuts from the Fed in the near term due to inflationary pressures. Richmond Fed President Thomas Barkin said the US economy is positive but uncertain about trade and policy impacts from the incoming Trump administration.
President-elect Donald Trump’s proposals, including corporate tax cuts and regulatory easing, could boost corporate profits but also risk placing upward pressure on inflation. With fourth-quarter earnings season looming, analysts expect S&P 500 earnings growth of 9.6% year-on-year.
Other notable news includes U.S. Steel dropping 6.5% after President Joe Biden blocked the proposed sale to Japan’s Nippon Steel due to national security concerns, and Microsoft gaining 1.1% on its AI-enabled data center investment.
Source: https://www.reuters.com/markets/us/futures-inch-up-with-economic-data-upcoming-policy-shifts-focus-2025-01-03