Stocks in the US were higher on Friday, with the S&P 500 rising 1.7%, the Nasdaq gaining 2.2%, and the Dow Jones adding nearly 550 points, as traders attempted to recover from a weak week that pushed the S&P and Nasdaq into correction territory.
US stocks rebound
Sentiment improved amid signs that lawmakers in Washington will successfully avert a government shutdown, easing fears of economic disruption and bolstering investor confidence. The prospect of continued government funding provided a much-needed boost to markets after a turbulent week marked by volatility and risk-off sentiment.
Meanwhile, investors remain focused on escalating trade tensions under President Trump and their potential impact on the US economy. Concerns over retaliatory tariffs, particularly in key industries such as agriculture, automotive, and technology, have added uncertainty to the market outlook. So far, inflationary pressures have yet to appear in the Consumer Price Index (CPI) or Producer Price Index (PPI), but the latest University of Michigan consumer sentiment report showed a sharp decline, accompanied by soaring inflation expectations. This divergence has led to speculation over whether inflation could resurface more aggressively in the coming months, potentially complicating the Federal Reserve’s policy path.
Tech outperforms the market
Tech was by far the top-performing sector, driven by strong gains in semiconductor and AI-related stocks, while consumer staples underperformed as investors rotated into riskier assets. Nvidia, Broadcom, and Tesla each climbed about 3%, helping to propel the broader market higher. Despite Friday’s rebound, major indexes remain on track for significant weekly losses. The S&P 500 is down 4.3%, on pace for its worst performance since March 2023, while the Dow Jones has lost 4.6%, marking its steepest weekly decline since June 2022. The Nasdaq is also on track for a sharp 4.9% drop, as tech stocks struggled earlier in the week amid fears of tighter regulations and higher interest rates.
Investors eye Fed moves
Looking ahead, market participants will be closely monitoring next week’s Federal Reserve meeting for insights into future monetary policy decisions. While the Fed is widely expected to hold rates steady, investors will be scrutinizing updated economic projections and Chair Jerome Powell’s remarks for any hints about the timing and extent of potential rate cuts this year. Additionally, earnings reports from major retailers and economic data releases, including the latest jobs report, could further influence market direction in the days ahead.
