(Bloomberg) — Stocks powered ahead to notch their best week because the November presidential election just ahead of Donald Trump’s inauguration.
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Most groups within the S&P 500 rose, with the gauge up 1% on Friday. Nvidia Corp. and Tesla Inc. led gains in megacaps, while Intel Corp. jumped greater than 9% after a report the chipmaker is an acquisition goal. Also aiding sentiment were headlines that Trump and Chinese President Xi Jinping discussed trade, TikTok and fentanyl, which could set the tone for relations between the world’s two largest economies. Bonds also rebounded this week, with 10-year yields down about 15 basis points within the span.
Trump, who is about to be sworn in because the forty seventh US president on Monday, has reiterated his give attention to core priorities akin to cutting taxes and raising tariffs. Equities soared following the election on bets the brand new administration will enact pro-growth policies that may boost Corporate America. While stocks faltered last month on hawkish Fed signals, recent data showing cooling inflation reignited bets on rate cuts.
“This week’s easing inflation data and a positive response to earnings from several financial firms resulted in a bond and stock rally,” said Craig Johnson at Piper Sandler. “Recent short-term oversold conditions and weak bullish sentiment are underpinning the recovery of the key indices from inside their primary uptrends.”
To Mark Hackett at Nationwide, the bounce in equities is encouraging, indicating the balance between bulls and bears is leveling.
“Markets are more likely to remain in a zigzag pattern through earnings season,” he noted. “Once earnings season is finished, expectations are reset, and the buyback window reopens, the bulls can reestablish control.”
The S&P 500 prolonged its advance for the week to 2.9%. The Nasdaq 100 climbed 1.7% Friday. The Dow Jones Industrial Average added 0.8%. A gauge of the “Magnificent Seven” megacaps rallied 1.8%. The Russell 2000 advanced 0.4%. Buoyed by solid earnings, banks continued to surge, sending a closely watched industry gauge up 8.2% for the week. US markets will likely be closed Monday for a vacation.
The yield on 10-year Treasuries was little modified at 4.61%. The Bloomberg Dollar Spot Index rose 0.3%. Bitcoin jumped to around $105,000.
“What a difference every week makes,” said Steve Sosnick at Interactive Brokers. “Right now last Friday stocks were selling off sharply due to a better-than-expected jobs report. It revealed the equity market’s somewhat seemingly obvious preference for rate cuts over a solid economy.”
From a technical perspective, Dan Wantrobski at Janney Montgomery Scott, says the setup was “nearly perfect for oversold conditions to collide with positive news and trigger the rally we’re currently experiencing.”
When Trump takes his oath as the subsequent US president on Monday, stock investors could have one big reason to breathe a sigh of relief. History shows the performance of the equities benchmark over a three-month period normally improves after inauguration day.
History shows that the common three-month performance of the S&P 500 going into the ceremony is nearly 1%, in comparison with a 3.7% rise on the way in which out, based on Jefferies’ evaluation of information going back to 1929.
The index “typically trades lumpy around inaugurations,” the firm’s strategists said, but things start to enhance a couple of months in. In actual fact, on average the S&P gains 8.3% six months into an inauguration and about 9.5% 12 months in, based on Jefferies.
Trump’s return to the White House will likely shield US stocks from a giant selloff, based on Bank of America Corp. strategists, as investors give attention to his protectionist agenda and proposals for lower corporate taxes.
US stocks are “protected by Trump” from downside, strategist Michael Hartnett wrote in a note, although he doesn’t expect sharp gains either as a consequence of risks including high concentration in mega-cap technology stocks, valuations and investor positioning.
“We proceed to view US equities as attractive, forecasting that 9% earnings growth this 12 months will drive the S&P 500 to six,600 by the tip of the 12 months,” said Mark Haefele at UBS Global Wealth Management. “Large-caps should outperform mid- and small-caps given their greater AI exposure, higher earnings trends, and fewer dependency on Fed rate cuts.
Sector-wise, he likes information technology, financials, utilities, communication services, and consumer discretionary.
“While you’ve had so a few years should significant outperformance of US equities, it’s very difficult to then take a look at opportunities outside the US and think that they’re going to be any more attractive,” said Zehrid Osmani at Martin Currie Investment Management. “But valuation discipline must be a very important angle for investors. We would wish to see a broadening of the earnings momentum for the time being.”
Corporate Highlights:
Microsoft Corp.’s $13 billion investment in OpenAI raises concerns that the tech giant could extend its dominance in cloud computing into the nascent artificial intelligence market, the Federal Trade Commission said in a report released Friday.
The Supreme Court unanimously upheld a law that threatens to shut down the wildly popular TikTok social media platform within the US as soon as Sunday, ruling that free speech rights must yield to concerns that Chinese control of the app creates a national-security risk.
US auto safety regulators are probing General Motors Co. over concerns that greater than 870,000 of its full-size pickup trucks and SUVs face the chance of engine failure.
Applied Materials Inc. and Lam Research Corp. were raised to obese from sector weight at KeyBanc Capital Markets because the broker repositions semicap coverage toward immediate growth drivers.
J.B. Hunt Transport Services Inc. reported fourth-quarter earnings trailed expectations and it warned about first-quarter results, in addition to cost pressures in 2025.
JetBlue Airways Corp. and Southwest Airlines Co. were downgraded to underperform from neutral at Bank of America Corp., which citied their lower exposure to corporate, premium and international routes.
Novo Nordisk A/S’s blockbuster drug Wegovy was targeted for price cuts by the US government and suffered a setback in a latest trial, adding to growing threats to the Danish company’s early dominance within the surging market for brand spanking new weight-loss treatments.
Bumble Inc. founder Whitney Wolfe Herd will return to the dating-app firm as chief executive officer, a 12 months after she handed over the reins to a Slack Technologies Inc. executive.
A number of the predominant moves in markets:
Stocks
The S&P 500 rose 1% as of 4 p.m. Recent York time
The Nasdaq 100 rose 1.7%
The Dow Jones Industrial Average rose 0.8%
The MSCI World Index rose 0.8%
Bloomberg Magnificent 7 Total Return Index rose 1.8%
The Russell 2000 Index rose 0.4%
Currencies
The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.3% to $1.0275
The British pound fell 0.6% to $1.2170
The Japanese yen fell 0.6% to 156.15 per dollar
Cryptocurrencies
Bitcoin rose 4.9% to $105,064.59
Ether rose 5.9% to $3,514.99
Bonds
The yield on 10-year Treasuries was little modified at 4.61%
Germany’s 10-year yield declined one basis point to 2.54%
Britain’s 10-year yield declined two basis points to 4.66%
Commodities
West Texas Intermediate crude fell 0.9% to $77.95 a barrel
Spot gold fell 0.5% to $2,701.21 an oz.
This story was produced with the help of Bloomberg Automation.
–With assistance from Isabelle Lee, Sujata Rao, Margaryta Kirakosian and John Viljoen.