After several sessions of trending downward, the stock market rallied significantly on Friday, with a particularly robust surge in the tech-heavy Nasdaq.
By the close of the trading day, the primary indices had all made considerable gains. The Nasdaq Composite soared 340.88 points, or 1.8%, closing at 19,621.68. The S&P 500 advanced 73.92 points, or 1.3%, to finish at 5,942.47, while the Dow Jones Industrial Average increased by 339.86 points, or 0.8%, ending at 42,732.13.
Despite Friday's recovery, all major indices recorded declines for the holiday-shortened week. The Dow decreased by 0.6%, with both the Nasdaq and S&P 500 retreating by 0.5%.
The resurgence in market activity was attributed in part to traders capitalizing on stocks considered undervalued after recent declines.
Before Friday, both the Nasdaq and S&P 500 had closed lower for five consecutive sessions, with the Nasdaq reaching its lowest point in a month during Thursday's trading. However, the indices remain below their record highs set in December, amidst ongoing market instability.
Participation in the market was also subdued post-New Year's Day, and this lighter trading volume may have amplified the upward movement.
On the economic front, the Institute for Supply Management released figures indicating a slower contraction in U.S. manufacturing for December. The manufacturing PMI slightly rose to 49.3 from November’s 48.4, despite staying under the 50 mark, which traditionally signals contraction. Economists had not anticipated any change.
This increase pushed the PMI to its highest since March 2024, when it reached 50.3. "Despite staying in contractionary territory, factors such as improved new orders, low customer inventories, and the potential for tariffs to stimulate demand could uphold a positive momentum in the near term," noted Matthew Martin, Senior U.S. Economist at Oxford Economics.
**Sector Highlights**
Technology stocks played a pivotal role in the market rebound, significantly boosting the Nasdaq. Within the tech sector, computer hardware and semiconductor stocks performed exceptionally well, as evidenced by the NYSE Arca Computer Hardware Index rising by 3.1% and the Philadelphia Semiconductor Index advancing by 2.8%.
Further substantial gains were observed in the commercial real estate sector, leading to a 1.4% rise in the Dow Jones U.S. Real Estate Index. Oil producers, utilities, and housing shares also demonstrated notable strength, while gold stocks and precious metal prices experienced a decline.
**Global Markets**
In Asia-Pacific trading on Friday, markets presented a mixed outcome. The Shanghai Composite Index in China dropped by 1.6%, contrasting with South Korea's Kospi, which increased by 1.8%.
In Europe, markets faced declines, with France's CAC 40 Index dropping by 1.5%, Germany's DAX Index losing 0.6%, and the U.K.'s FTSE 100 Index decreasing by 0.4%.
In the bond market, U.S. treasuries slightly declined throughout the session after initial gains. Consequently, the yield on the benchmark ten-year note increased by 2.1 basis points to 4.596%, after reaching a low of 4.539%.
**Outlook**
The upcoming week will likely spotlight the Labor Department’s monthly jobs report. Other reports focusing on services sector activity, consumer sentiment, and minutes from the latest Federal Reserve meeting may also be of interest to investors.
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