In a notable display of investor confidence, US benchmark equity indexes recorded significant gains on Friday as market participants assessed the latest data from the manufacturing sector along with key comments from a Federal Reserve official. The Nasdaq Composite experienced a robust increase of 1.8%, closing at 19,621.7, while the S&P 500 saw a rise of 1.3% to end the day at 5,942.5.
The Dow Jones Industrial Average also reflected positive momentum, advancing 0.8% to a closing value of 42,732.1. Among the sectors, consumer discretionary emerged as the leading gainer, while materials exhibited little change; notably, no sector concluded the day in the red. Looking back over the week, the Dow registered a decline of 0.6%, and both the S&P 500 and Nasdaq recorded a slight drop of 0.5%.
On the economic front, the contraction within the US manufacturing sector showed signs of easing in December, driven by increased demand, according to a recent survey released by the Institute for Supply Management. BMO Capital Markets commented that, 'On balance, the report suggests manufacturers ended the year with a hint of optimism, but they could face some pretty stiff challenges in the new year.' Adding to this narrative, a survey by S&P Global ($SPGI) indicated that the manufacturing sector remains in a contraction phase, influenced by declining output and new orders, even as sentiment reached its lowest point since August.
Turning to the bond markets, the US two-year yield rose by 3.5 basis points to a level of 4.28% on Friday, while the 10-year yield saw an increase of 2.7 basis points, reaching 4.60%. Commenting on the economic outlook, Richmond Fed President Tom Barkin expressed a positive baseline expectation for the US economy in 2025, buoyed by strong consumer spending, but acknowledged ongoing risks related to inflation.
'I expect the story for the coming year to revolve more around supply and demand – and perhaps geopolitics – than monetary policy,' Barkin noted, adding that if employment faltered or inflation resurgence occurred, appropriate tools would be available to address such issues. In the commodity markets, West Texas Intermediate crude oil prices climbed by 1.2%, now priced at $74.02 a barrel.
Turning to corporate news, Nvidia ($NVDA) is set to unveil new gaming products at the forthcoming CES tech show, while investors remain eager for updates regarding the growth trajectory of the company’s generative artificial intelligence sales, according to a note from Wedbush Securities. As a result, shares of the chipmaking giant soared by 4.5%, positioning it as the top gainer on the Dow.
Tesla ($TSLA) also emerged as one of the standout performers on both the S&P 500 and Nasdaq, marking an impressive 8.2% rise. Reports from Reuters suggest that the electric vehicle manufacturer achieved record sales in China during 2024. In a separate revelation, Evercore ISI raised its price target on Tesla stock from $195 to $275.
On the downside, Adobe ($ADBE) experienced a decline of 2.4%, representing the largest drop on the Nasdaq post UBS's adjustment of its price target for the software maker from $525 to $475. In a noteworthy development, President Joe Biden intervened to block United States Steel’s ($X) proposed acquisition by Japan's Nippon Steel, citing concerns regarding national security and supply chain vulnerabilities.
As a response, shares of the US steelmaker plummeted by 6.5%. In the precious metals market, gold recorded a decrease of 0.7%, settling at $2,651.70 per troy ounce, while silver rose by 0.6%, bringing its value to $30.09 per ounce..