Wall Street rises to turn a dismal week into just a bad one

Wall Street rises to turn a dismal week into just a bad one

NEW YORK (AP) — U.S. stocks rose Friday to turn what would have been one of the market’s worst weeks of the year into just a pretty bad one.

The S&P 500 rallied 1.1% for its best day in six weeks and shaved its loss for the week down to 2%. The Dow Jones Industrial Average jumped 498 points, or 1.2%, and the Nasdaq composite gained 1%.

Superstar stock Nvidia and other Big Tech companies led the market, which got a lift after a report said a measure of inflation the Federal Reserve likes to use was slightly lower last month than economists expected. It’s an encouraging signal following recent reports suggesting inflation may be tough to get all the way down to the Fed’s 2% goal from its peak above 9%.

The threat of higher inflation was one of the reasons Fed Chair Jerome Powell gave this week when the central bank hinted it may deliver fewer cuts to interest rates next year than it earlier expected.

That warning sent a shock through the stock market, which had run to 57 all-time highs this year amid the widespread assumption the Fed would deliver a string of cuts to rates into 2025. Now traders are largely betting on one, two or perhaps even zero next year, according to data from CME Group.

“When optimism is rising and market multiples are expanding, it just takes a little fear to take the veneer off a market rally,” according to Brian Jacobsen, chief economist at Annex Wealth Management.

Friday’s better-than-expected inflation data pushed traders to trim their bets for zero cuts in 2025, which they now collectively see a 16% chance of. Easier interest rates would boost the economy by making it cheaper for households and businesses to borrow, but they could also provide fuel for inflation.

Critics had been warning stock prices were vulnerable to drops after running so high and that the market likely needed everything to go correctly to justify its stellar gains for the year. Besides the diminished hopes for several rate cuts next year, Wall Street got another reminder late Thursday that everything may not go as expected.

The House of Representatives resoundingly rejected President-elect Donald Trump’s plan to keep the U.S. government fully running ahead of a potential shutdown. The bickering that ensued indicates Washington may not run smoothly even with Republicans in full control of the House, Senate and White House.

The U.S. stock market has lost a chunk of its gain since Trump’s win on Election Day, which raised hopes for faster economic growth and more lax regulations that would boost corporate profits. Worries have risen that Trump’s preference for tariffs and other policies could lead to higher inflation, a bigger U.S. government debt and difficulties for global trade.

Source link

Visited 1 times, 1 visit(s) today

Leave a Reply

Your email address will not be published. Required fields are marked *