The stock market saw a strong recovery on Friday, with the Dow Jones Industrial Average and other major indexes closing higher, though they trimmed gains from earlier in the day. A softer-than-expected inflation report provided optimism, while efforts continued to avert a partial government shutdown.
- Dow Jones gained 1.2%, adding nearly 500 points.
- S&P 500 rose by 1.1%.
- Nasdaq Composite climbed 1%, though it had been up 2% earlier in the session.
Investor Activity and Market Dynamics
There was an uptick in market volume, as both the New York Stock Exchange and Nasdaq saw increased trading activity. It was also a “triple witching” day, with options expirations impacting market fluctuations.
- Advancing stocks outpaced decliners on both exchanges: 7-2 on the NYSE and 11-5 on the Nasdaq.
- All 11 S&P 500 sector indexes finished higher for the first time since November 5.
The Russell 2000 index of small-cap stocks rebounded by 0.9%, while the Innovator IBD 50 ETF, which tracks top-performing growth stocks, gained 2%.
Key Stock Gainers: Nvidia, Palantir, and Lemonade
Among the standout performers were Nvidia, Palantir, and Lemonade, which saw gains ranging from 7% to 9%. Nvidia, in particular, rose more than 3% after a bullish report from Morgan Stanley.
- Nvidia’s stock rose sharply, buoyed by Morgan Stanley’s positive outlook on artificial intelligence chipmakers.
- The stock remains on the IBD Leaderboard, although with a hedge due to market volatility.
Treasury Yields and Inflation Impact
The inflation report revealed a Personal Consumption Expenditure (PCE) index increase of just 0.1% month-over-month, beating expectations of 0.2%. Annual inflation for the PCE index came in at 2.4%, slightly below the expected 2.5%. The core inflation index also rose by only 0.1% monthly and 2.8% annually, providing some relief for the markets.
- Treasury yields rose earlier in the week, but dropped on Friday after the inflation data was released, with the 10-year Treasury note yield falling to 4.51%.
Nvidia’s Rise Continues Amid AI Optimism
Nvidia continued its momentum from Thursday, rising more than 3% on Friday. The positive sentiment was driven by Morgan Stanley’s upbeat forecast for AI chipmakers, with Nvidia named as a top pick for 2025.
- Nvidia’s performance was part of the broader artificial intelligence sector rally.
- The stock remains a high performer despite being below its 50-day moving average.
Trump Media Stock Falls; FedEx Gains But Loses Momentum
- Trump Media & Technology faced a significant decline after news emerged that Donald Trump had moved shares to a revocable trust, resulting in a drop near its 50-day moving average.
- FedEx initially surged after strong earnings but gave up its gains, ending the day down by over 1%. The company also announced plans to spin off its freight business.
Carnival and Novo Nordisk Stocks React to Earnings and Drug News
- Carnival saw a 3% jump after a strong fourth-quarter report. The company’s earnings beat expectations, and sales of $5.9 billion were in line with forecasts.
- On the flip side, Novo Nordisk fell by more than 20% after its experimental obesity drug CagriSema failed to meet its weight-loss target, while Eli Lilly surged 4%.
Conclusion: Market Outlook Amid Economic Developments
Friday’s stock market rebound, although trimmed, was bolstered by encouraging inflation data and a sense of optimism surrounding the U.S. economy. As investors digest both the inflation report and ongoing government shutdown concerns, the outlook for the stock market remains cautiously optimistic.
