Market Recap: Wall Street Rallies to End First Week of 2025
Major Indexes Surge as Tech Stocks Lead the Charge
Wall Street kicked off the first Friday of 2025 with a robust rally, shaking off the holiday-season funk that had plagued the markets in recent days. The S&P 500 (^GSPC) climbed 1.3% to close at 5,942.47, marking its best day in nearly two months and its first gain since Christmas. The Dow Jones Industrial Average (^DJI) rose 0.8% to 42,732.13, while the Nasdaq Composite (^IXIC) surged 1.8% to 19,621.68.
Despite the day’s gains, the major indexes still recorded weekly losses. The S&P 500 and Dow both declined by approximately 0.5% for the week, while the Nasdaq dropped about 0.5%. The Russell 2000 (^RUT), representing smaller companies, bucked the trend with a 1.1% weekly gain.
Tech Giants Drive Market Momentum
Big Tech stocks were the primary catalysts for Friday’s rally. Nvidia (NVDA) and Tesla (TSLA) were standout performers, helping to pull the market higher. Nvidia shares rose 4.45% to $144.47, while Tesla rebounded strongly with an 8.22% gain to $410.44, recovering from a 6.1% drop earlier in the week following disappointing delivery numbers for 2024.
Other notable tech movers included Rivian Automotive (RIVN), which surged 24.45% to $16.49, and Lucid Group (LCID), gaining 8.58% to $3.29.
Market Breadth and Sector Performance
Market breadth was positive, with advancers outnumbering decliners on both the NYSE and Nasdaq. Seven out of eleven sectors in the S&P 500 ended in positive territory, with technology and consumer discretionary stocks leading the gains. However, the rally was tempered by drops in beer, wine, and liquor company stocks following a warning from the U.S. Surgeon General about cancer risks related to alcohol consumption.
Economic Data and Treasury Yields
Treasury yields ticked higher following a better-than-feared report on U.S. manufacturing. The benchmark 10-year Treasury yield briefly touched 4.6% before settling lower. The ISM Manufacturing Employment Index for December came in at 45.3, down from the previous reading of 48.1, indicating continued contraction in manufacturing employment.
Upcoming Market Events and Policy Shifts
Investors are closely watching several key events that could impact market sentiment in the coming days:
1. The newly-elected Congress is set to commence its first session, with potential policy shifts under the incoming Trump administration in focus.
2. President-elect Trump’s inauguration on January 20th is expected to bring clarity on proposed economic policies.
3. The Federal Reserve’s stance on interest rates, with traders anticipating about 50 basis points of rate cuts this year.
4. Quarterly earnings reports later this month will test the market’s resilience and provide insights into corporate performance.
Notable Stock Movements
– Apple (AAPL) weighed on the market earlier in the week, with shares declining 2.6% on Monday.
– U.S. Steel (X) slid 8.2% after reports that President Joe Biden had decided to block Nippon Steel’s proposed $14.9 billion acquisition of the company.
– Block (SQ) rose 2.8% following an upgrade to “outperform” from Raymond James.
Looking Ahead
As we move further into 2025, market participants will be watching for signs of economic resilience and potential policy changes. The upcoming earnings season will be crucial in determining whether the market can sustain its current valuations and continue the bull run that has characterized the past two years.
Investors should remain vigilant, as uncertainties surrounding global trade, inflation, and monetary policy could introduce volatility in the coming months. However, with strong corporate performance expected and potential fiscal stimulus on the horizon, many analysts maintain an optimistic outlook for U.S. stocks in the year ahead.
Remember to stay informed and consult with financial advisors before making investment decisions in this dynamic market environment.
