U.S. stocks rallied on Friday to close out a strong week on optimism over the health of the economy and path of interest rates as investors braced for a slew of policy changes under the incoming Trump administration. The S&P 500 and Dow Industrials registered their biggest weekly percentage gains since early November and the Nasdaq recorded its best since early December. Data this week allayed fears that inflation would resurge while expectations have grown that the Federal Reserve will bump up the timing and magnitude of rate cuts this year.
The Commerce Department reported on Friday that U.S. single-family homebuilding rose to a 10-month high although demand will likely be curbed by rising mortgage rates and an oversupply of new properties. A separate report revealed a surge in manufacturing output last month. President-elect Donald Trump will be inaugurated on Monday, when U.S. markets are closed for the Martin Luther King Jr. Day holiday.
Also ReadUS Stocks: Wall Street slips after rally as earnings, data eyed
Uncertainty over the potential for some of Trump’s policies such as tariffs to rekindle rising inflation pressures and slow the path of Fed rate cuts has weighed on equities in recent weeks. But a solid start to the corporate earnings season with results from many big banks has also helped buoy stocks this week, with the S&P 500 bank index up 7.41% on the week.
“Stronger growth, feeding into better corporate earnings, you’re kind of getting off to a start to the year here that there’s plenty of questions both in terms of fiscal and monetary policy and what the Trump agenda will look like, or what shape it will take,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Southfield, Michigan.”Despite all those questions, we’re starting the year on a reasonably better footing than we’ve been on perhaps in the last few years.”
The Dow Jones Industrial Average rose 334.70 points, or 0.78%, to 43,487.83, the S&P 500 gained 59.32 points, or 1.00%, to 5,996.66 and the Nasdaq Composite gained 291.91 points, or 1.51%, to 19,630.20.For the week, the Dow rose 3.69%, the S&P gained 2.92% and the Nasdaq climbed 2.43%.The benchmark U.S. 10-year note yield edged up 1.3 basis points to 4.619%, but has eased off a 14-month high of 4.809% hit earlier this week.
» Read More
