Source : THE AGE NEWS
By Stan Choe
US stock indexes closed their best week in two months with a flourish on Friday.
The S&P 500 climbed 1 per cent to clinch its first winning week in the last three. The Dow Jones rose 334 points, or 0.8 per cent, and the Nasdaq composite rallied 1.5 per cent. The Australian sharemarket is set to advance on Monday, with futures pointing to a rise of 28 points, or 0.3 per cent, at the open.
Wall Street closed its best week since Trump’s election win with more gains.Credit: AP
SLB helped lead the market after the provider of services to oilfields delivered bigger profit and revenue for the end of 2024 than analysts expected. It jumped 6.1 per cent after it also raised its dividend by 3.6 per cent and said it’s returning $US2.3 billion ($3.7 billion) to its investors by buying back its own stock.
The most forceful pushes upward came from Big Tech stocks. All the companies in what’s come to be known as the “Magnificent Seven” rose: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. Because they’re so massive in size, their movements carry more weight on the S&P 500 and other indexes than other stocks.
The Magnificent Seven have been under pressure recently because of criticism their stock prices may have shot too high after leading the market for so many years. Such worries grew after Treasury yields jumped in the bond market. Higher yields hurt prices for all kinds of investments, particularly those seen as the most expensive.
But stocks broadly got a lift last week from an encouraging report on US inflation, which raised hopes that the Federal Reserve may deliver more cuts to interest rates this year. More such cuts, which began in September, would ease the brakes off the economy and boost prices for investments, though they can also give inflation more fuel.
Wall Street has been lurching down and up in recent weeks as economic reports pushed traders to revamp their expectations about what the Fed will do with rates. Lower worries about inflation have sent Treasury yields down and stocks up, while worsening worries about inflation have triggered the opposite reaction.
Treasury yields eased sharply this past week, and the 10-year Treasury yield eased further on Friday. It’s at 4.61 per cent, down from 4.62 per cent late Thursday and from 4.76 per cent a week earlier.
Still, even with this week’s better-than-expected readout on inflation, some on Wall Street remain sceptical about the chances for more cuts. With the US economy in solid overall shape, “you shouldn’t fix what’s not broken,” Bank of America economists Claudio Irigoyen and Antonio Gabriel said in a BofA Global Research report.
They also pointed to the uncertainties created by “Trumponomics 2.0.” Policies pushed by President-elect Donald Trump could help push up inflation, or at least expectations for it, including widespread tariffs and tax cuts for an economy that’s already growing.
TikTok said on Monday (AEDT) it was restoring its service after President-elect Donald Trump said he would revive the social media app’s access in the US when he returns to power on Monday.
Prices for all kinds of investments from stocks to cryptocurrencies have swung amid the uncertainty following an initial burst after Election Day. On one hand are hopes for stronger profits for companies and greater acceptance of crypto. On the other are worries about a potentially swelling US government deficit and upward pressure on inflation.
Wall Street still sees banks as some of the biggest beneficiaries from a second Trump administration. Besides a potentially stronger economy, which would boost profits for lending, investors expect another Trump term to mean less regulation on banks.
Truist Financial rose 5.9 per cent Friday after joining the list of banks to report better profits for the end of 2024 than analysts expected. The company said its average deposits rose 1.5 per cent during the quarter, and it followed bigger-than-expected profit reports from large rivals like Wells Fargo, Citigroup and others.
Other smaller, regional banks reported mixed results on Friday. Regions Financial fell 1.3 per cent.
J.B. Hunt Transport Services dropped 7.4 per cent for the biggest loss in the S&P 500 after falling short of analysts’ expectations for profit in the latest quarter. Higher equipment and insurance-related costs helped drag on its results.
All told, the S&P 500 rose 59.32 points to 5,996.66. The Dow Jones Industrial Average gained 334.70 to 43,487.83, and the Nasdaq composite jumped 291.91 to 19,630.20.
In stock markets abroad, indexes rallied in Europe after finishing mixed in Asia.
Chinese indexes rose modestly after authorities said the world’s second-largest economy grew at a 5 per cent annual pace last year, hitting the government’s target but slowing from the year before. Stocks rose 0.3 per cent in Hong Kong and 0.2 per cent in Shanghai.
Economists are forecasting a further slowing of growth this year and beyond for the world’s second-largest economy, and Trump’s threats to raise US tariffs on Chinese goods have added to Beijing’s challenges as it faces a raft of moves by Washington to limit access to advanced technology, such as computer chips used in artificial intelligence.
In Tokyo, the Nikkei 225 fell 0.3 per cent as Nintendo sank 4.3 per cent following the unveiling of its newest console. The company promised more details about the Switch 2 in April and said it will be released this year.
AP
