In a notable turn of events, US benchmark equity indexes experienced a rally ahead of Friday's closing bell, as investors closely examined the latest data emerging from the manufacturing sector alongside comments from a Federal Reserve official. The Nasdaq Composite witnessed an impressive rise of 1.7%, reaching 19,602.3, while the S&P 500 saw a 1.2% uptick to close at 5,940.1.
The Dow Jones Industrial Average also made gains, advancing by 0.8% to 42,721.3. Notably, all sectors registered advances, with consumer discretionary leading the pack. Recent data from the Institute for Supply Management revealed a favorable development in the US manufacturing sector, indicating improved conditions during December as demand saw a rebound.
This positive news was reflected in the trading activity, providing a boost of confidence to investors. On the interest rates front, the US 10-year yield edged up by 2.5 basis points, settling at 4.6%, while the two-year rate saw a slightly larger increase of 3.3 basis points, reaching 4.28%. Such movements in yields often reflect broader market sentiments regarding economic health and inflation expectations. Richmond Fed President Tom Barkin shared insights into the economic outlook, expressing that his baseline expectation for the US economy in 2025 remains positive.
This optimism is largely driven by robust consumer spending; however, he cautioned about potential risks stemming from ongoing inflationary pressures. In the commodities market, West Texas Intermediate crude oil saw a notable increase, climbing 1.3% to reach $74.06 a barrel, indicating growing demand for oil as market conditions evolve. Amid these developments, the equity markets responded positively, reflecting a sense of resilience and potential for continued growth despite underlying inflation concerns.
Investors will need to keep a close watch on subsequent reports and the Federal Reserve's monetary policy stance as they navigate these market dynamics..