U.S. stock markets surged on Friday, reversing a week of sharp declines. The S&P 500 climbed 1.8%, on pace for its strongest day in six weeks, while the Dow Jones Industrial Average rose 761 points (1.8%) and the Nasdaq Composite followed suit with a 1.8% gain.
Key Drivers of the Rally
- Eli Lilly and Novo Nordisk Developments
- Eli Lilly’s stock rose 5.1% after competitor Novo Nordisk shared updates on its obesity treatment, CagriSema, which fell short of expectations. Lilly’s Zepbound weight-loss treatment stands to benefit from this, boosting its market position.
- Nvidia Leads with Inflation Insights
- Nvidia shares jumped, buoyed by broader market momentum and encouraging inflation data. A key inflation measure favored by the Federal Reserve came in slightly below expectations for November, providing optimism about easing price pressures.
- Market Response to Fed Signals
- Federal Reserve Chair Jerome Powell’s recent caution on inflation and interest rate cuts had rattled markets earlier in the week. However, Friday’s inflation data led traders to adjust their forecasts, showing less concern about rate hikes in 2025.
Political and Economic Concerns
- Potential Government Shutdown
- The House of Representatives’ rejection of President-elect Donald Trump’s funding proposal raised concerns about a looming government shutdown and potential legislative gridlock despite Republican control.
- Global and Domestic Risks
- Analysts pointed to broader uncertainties, including global trade tensions and geopolitical instability, as significant challenges for 2025.
- Corporate Challenges
- U.S. Steel’s stock fell 3.4% after revising its Q4 outlook downward due to depressed steel prices.
- Nike’s stock dipped 0.1%, with analysts noting that turnaround strategies under new CEO Elliott Hill could weigh on near-term results.
Winners in the Market
- Cruise Line Stocks
- Carnival soared 5.3% after exceeding profit expectations for the latest quarter, supported by strong demand and higher fares. Norwegian Cruise Line and Royal Caribbean gained over 4%.
- Treasury Yields Decline
- The yield on the 10-year Treasury fell to 4.49% from 4.57%, offering a slight reprieve in bond markets.
Looking Ahead
While the rally provided much-needed relief, significant risks remain. Analysts caution that the market’s strong performance hinges on favorable developments in inflation control, government stability, and global trade dynamics. As 2025 approaches, investors will be closely watching for shifts in the political and economic landscape that could shape market performance.
