After a largely uninspiring session concluded with a downward trend yesterday, the stock markets are regaining ground on Friday. The major indices have all moved decisively into positive territory, with the tech-centric Nasdaq experiencing a significant recovery.
Currently, the indices are slightly down from their peak levels of today. The Nasdaq has risen by 278.34 points, or 1.4%, at 19,616.63, the S&P 500 has increased by 59.89 points, or 1.0%, reaching 5,997.23, and the Dow Jones has advanced by 376.03 points, or 0.9%, at 43,529.16.
This upward momentum in stocks can be attributed to a continuous drop in treasury yields. The yield on the benchmark ten-year note has declined for the fourth consecutive day, following its peak closing level in over a year on Monday.
The recent downtrend in treasury yields is tied to U.S. inflation data, released in recent days, which has instigated renewed optimism about the future trajectory of interest rates.
Further bolstering this optimism, Federal Reserve Governor Christopher Waller expressed to CNBC that the central bank has the potential to reduce interest rates multiple times this year, contingent on inflation easing as he anticipates.
"As long as the inflation data remains positive or continues its current trend, I can certainly envision rate cuts happening sooner than the markets might be expecting," Waller remarked during an interview with Sara Eisen on CNBC's "Squawk on the Street" on Thursday.
According to Waller, the extent of rate cuts will be data-dependent. This suggests that the Fed could reduce rates three or four times with significant inflation progress or opt for fewer cuts if inflation persists.
The upswing on Wall Street may also reflect growing confidence in the market outlook under President-elect Donald Trump, who is set to take office for a second term on Monday.
Stocks witnessed a surge following Trump's election in November, driven by expectations of pro-business policies under his administration, notwithstanding some concerns over proposed tariff impacts.
In domestic economic updates, the Federal Reserve reported a more substantial-than-anticipated increase in industrial production for December.
The Fed noted a 0.9% jump in industrial production in December, following a revised 0.2% rise in November.
Economists had anticipated a 0.3% climb in industrial production compared to the 0.1% decline initially reported for the previous month.
**Sector Analysis:**
Semiconductor stocks are delivering some of the strongest performances in the market today, propelling the Philadelphia Semiconductor Index up by 2.4%.
Applied Materials (AMAT) has seen a considerable increase following an upgrade from KeyBanc Capital Markets, raising its rating to Overweight from Sector Weight.
Steel stocks are also showing significant strength, with the NYSE Arca Steel Index ascending by 1.3% to achieve its best intraday level in a month.
Retail, software, and brokerage stocks are also witnessing marked strength, whereas pharmaceutical stocks have turned lower.
**Global Markets:**
In international trading, stock markets across the Asia-Pacific region presented a mixed performance on Friday. Japan's Nikkei 225 Index dropped by 0.3%, whereas China's Shanghai Composite Index edged up by 0.2%.
Contrastingly, European markets have all experienced notable upward movement today. The U.K.'s FTSE 100 Index is up by 1.6%, while both the French CAC 40 Index and the German DAX Index have risen by 1.1%.
In the bond market, treasuries have retreated near the unchanged mark after showing initial strength. Consequently, the yield on the benchmark ten-year note, which moves inversely to its price, is down by less than a basis point at 4.599%, after touching a low of 4.568%.
The material has been provided by InstaForex Company -
www.instaforex.com
