Stock Market Closes Higher Despite Trimmed Gains
The Dow Jones Industrial Average and other major stock indexes finished higher on Friday, although they trimmed their gains as the day progressed. A soft inflation report provided a positive backdrop for the market, with efforts continuing to avert a partial government shutdown.
- The Dow Jones rose nearly 500 points, or 1.2%.
- The S&P 500 gained 1.1%.
- The Nasdaq Composite climbed 1%, although it had been up as much as 2% during the session.
Increased Trading Volume on “Triple Witching” Day
Trading volume on the New York Stock Exchange and Nasdaq saw an uptick, as Friday marked a “triple witching” day of options expirations. Advancing stocks significantly outnumbered decliners, with a more than 7-to-2 ratio on the NYSE and an 11-to-5 ratio on the Nasdaq, according to FactSet. This was the first time since November 5 that all 11 S&P 500 sector indexes finished higher.
Small-Cap Stocks and ETFs Perform Well
The Russell 2000, a small-cap benchmark, rebounded by 0.9%, although it had been up as much as 1.9% earlier. The Innovator IBD 50 ETF outperformed, gaining 2%, despite paring its gains later.
Biggest Stock Gainers
- Lemonade, Palantir, and Rocket Lab were among the biggest gainers, with shares up 7% to 9%.
Nvidia Stock Climbs on Bullish Report
Nvidia stock rose more than 3% on Friday, following a positive report from Morgan Stanley on artificial intelligence (AI) chipmakers. The firm named Nvidia a top pick for 2025 and raised its price targets on several other AI chip stocks. Despite a recent dip below its 50-day moving average, Nvidia’s positive outlook is fueling investor confidence.
Inflation Eases, Treasury Yields Fall
The inflation report helped boost market sentiment, showing that the Personal Consumption and Expenditure (PCE) index rose by just 0.1%, compared to expectations of a 0.2% increase. The annual PCE increase came in at 2.4%, slightly below the expected 2.5%. Core inflation, excluding food and energy, rose 0.1% month-over-month and 2.8% year-over-year, both below economists’ predictions.
Magnificent Seven and Warren Buffett’s Investments
Among the Magnificent Seven, several big tech stocks reversed earlier losses, including Tesla, Meta Platforms, Microsoft, Amazon, and Apple. Additionally, Warren Buffett’s Berkshire Hathaway saw significant gains, with shares of Occidental Petroleum rising nearly 5% after news that Buffett purchased an additional 8.9 million shares of the company.
Government Shutdown Concerns Impact the Market
The looming threat of a partial government shutdown remains a key factor for investors. Lawmakers struggled to pass a spending bill, but House Speaker Mike Johnson stated that a shutdown could be averted, and details of a new plan were expected soon. This uncertainty continued to affect market sentiment.
Other Notable Stock Movements
- Trump Media & Technology saw a sharp decline in stock prices after reports that shares were transferred to a revocable trust.
- FedEx stock initially surged after earnings reports but ultimately gave up its gains, falling over 1% as investors reacted to declining sales and restructuring plans.
- Carnival Corporation surged 3% following strong fourth-quarter results, while Novo Nordisk dropped over 20% after its weight-loss drug failed a key clinical trial.
Conclusion
Friday’s stock market performance highlighted a positive sentiment driven by easing inflation and bullish reports for AI stocks. However, concerns about government shutdowns and mixed earnings reports led to some market volatility. Investors are advised to remain vigilant as the market adjusts to both economic data and political developments.
