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Wall Street rose on Friday, ending the first week of 2025 on an upbeat note and snapping several days of declines on fresh signs of stabilizing manufacturing.
The S&P 500 ended the day up 1.3%, its biggest gain since November 6, the day after Donald Trump won the US election. Friday’s gains for the benchmark also ended a five-day losing streak – its longest losing streak since April.
The tech-heavy Nasdaq rose 1.8%, with shares of electric vehicle maker Tesla Inc rising more than 8%, a day after the company’s shares fell a day after announcing the first decline in annual vehicle deliveries in more than a decade. Shares of semiconductor giant Nvidia rose more than 4%.
The rise occurred at the end of the shortened week on New Year’s Day, which could lead to lower trading volume. Analysts noted that some investors are simply preparing for the “real” start of 2025 on Monday.
But the day’s share price action also came as the latest reading of U.S. manufacturing activity beat consensus forecasts, boosting investor sentiment, and Trump ally Mike Johnson was re-elected as speaker of the U.S. House of Representatives.
“It’s really a combination – I call it a hodgepodge of different factors,” said Kristina Hooper, chief global market strategist at Invesco. “First, we saw some selling, so to some extent, I think investors recognize that when you sell for multiple days in a row, that creates a buying opportunity.”
Meanwhile, Hooper added: “We got some good news today on the manufacturing front. [figures] I think that definitely sets a positive tone. We had a relatively smooth election in the House of Representatives, which also contributed to a more positive mood.
On Friday, the ISM manufacturing purchasing managers’ index fell to 49.3 in December, below the 50 threshold that marks expansion but above economists’ forecasts and up from November’s 48.4.
“S&P 500 gains across the board [investors] Dec Mullarkey, managing director at SLC Management, said: “We are relieved by the orderly re-election of the Speaker of the U.S. House of Representatives as it helps reduce political uncertainty.”
Referring to the large technology companies that have dominated the U.S. stock market, he added, “The Big Seven, in particular, have remained resilient even with high valuations. Investors remain confident in huge spending.” [artificial intelligence] The investment will pay dividends and ensure first-mover advantage.
Even after Friday’s sharp gains, the S&P and Nasdaq still posted modest weekly losses.
Invesco’s Hooper believes that “the overall environment is favorable for risk assets”, which means “we may have more positive days rather than negative days” as the new year progresses. However, “it’s likely there will be more volatility,” she said.
“Let’s face it: as January 20 approaches, uncertainty grows. [the day of Trump’s inauguration] I think there will be more question marks about what the new administration might do.
Additional reporting by Will Schmidt
