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Wall Street stocks rallied on Friday to close the first week of 2025 on a higher note amid fresh signs of product stability that halted several days of losses.
The S&P 500 ended the day 1.3 percent higher, posting its biggest gain since Nov. 6 – the next day Donald Trump's US election victory. The benchmark index's gains on Friday brought an end to five consecutive days of losses – the longest since April.
The technology-heavy Nasdaq Composite added 1.8 percent, helped by a more than 8 percent rise in electric vehicle maker Tesla, whose shares had slipped the day before after announcing first decline in annual traffic more than ten years. Semiconductor giant Nvidia advanced more than 4 percent.
Friday's gains came at the end of a week shortened by New Year's Day, which may have brought smaller trading volumes. Analysts noted some investors were just preparing for the “real” start of 2025 on Monday.
But the day's share price moves also came as fresh readings on US manufacturing activity topped the consensus estimate, bolstering investor sentiment, even as Trump's running mate Mike Johnson was. was re-elected Speaker of the US House of Representatives.
“It's really a combination – I would call it a potpourri of different things,” said Kristina Hooper, global marketing specialist at Invesco. “First, we've seen the sale – and so to some extent, I think investors understand that there are buying opportunities created when you have more days to sell.”
At the same time, Hooper added, “We had good news today about the production (numbers) and I think it definitely sets a good tone. We had a smooth election in the House which helped contribute to the positive sentiment.”
The ISM manufacturing index of purchasing managers index on Friday reached 49.3 in December – below the 50 mark that marks the increase, but above economists' forecasts and higher than the reading of 48.4 in November.
“The IS&P 500 saw a broad rally as (investors) took comfort in the orderly re-election of the US House Speaker, as that helps reduce political uncertainty,” said Dec Mullarkey, managing director at SLC Management.
Referring to the group of Big Tech names that have dominated the US stock market, he added that “The Magnificent Seven, in particular, are always strong as estimates go up. Investors are still confident that the (artificial intelligence) issuance will pay dividends and secure initial profits.”
Even after Friday's sharp gains, the S&P and Nasdaq still posted small losses for the week.
Invesco's Hooper believes that “the overall environment is supportive of risk assets”, meaning that “we may have more good days than bad days” as the new year progresses. However, he said, “I think there could be more volatility.”
“Let's face it: there is more uncertainty, and as we get closer and closer to January 20” – the day of Trump's inauguration – “I think there will be question marks about what may come from the new administration.”
Additional reporting by Will Schmitt