U.S. Stocks Rebound on Friday
U.S. stocks rebounded on Friday, ending a holiday-shortened week that brought expectations of additional Federal Reserve rate cuts and looser regulatory policies from the incoming administration. The three major U.S. stock indexes, led by megacap growth companies such as Tesla and Nvidia, closed higher, with the Nasdaq posting the largest gain.
The S&P 500 rose 73.92 points, or 1.26%, to 5,942.47, while the Dow Jones Industrial Average gained 339.86 points, or 0.80%, to 42,732.13. The Nasdaq Composite added 340.88 points, or 1.77%, to 19,621.68.
All 11 major sectors in the S&P 500 closed higher, with consumer discretionary stocks enjoying the largest percentage gain after Thursday’s rout. The S&P 500 is expected to post a 9.6% year-over-year earnings growth rate, according to LSEG data.
The Institute for Supply Management’s purchasing managers’ index (PMI) surprised to the upside, gaining 0.9 point to 49.3, its highest reading since March. This news may reduce the need for additional interest rate cuts from the Federal Reserve in the near term due to the risk of re-igniting inflationary pressures.
The incoming Trump administration has proposed cutting corporate taxes, easing regulations, and imposing tariffs, which could boost corporate profits and energize the economy, but also run the risk of placing upward pressure on inflation. The newly elected Congress convened for its first session on Friday, and U.S. President-elect Donald Trump is expected to take the oath of office on January 20.