The S&P 500 and Dow Jones Industrial Average posted their biggest weekly gains since early November, and the Nasdaq hit its highest since early December. This week’s data allayed fears of a resurgence in inflation, but raised expectations that the Federal Reserve will bring forward the timing and size of interest rate cuts to 2025.
President-elect Donald Trump will take office on Monday, when U.S. markets are closed for the Martin Luther King Jr. Day holiday.
Investors are now bracing for a number of policy changes under the incoming Trump administration.
Uncertainty over the possibility that some of President Trump’s policies, such as tariffs, could reignite rising inflation pressures and slow the Fed’s path to lower interest rates has weighed on stocks in recent weeks.
However, a strong start to the corporate earnings season with results from many large banks also contributed to this week’s rally, with the S&P 500 Bank Index up 7.41% for the week.
For the week, the Dow Jones rose 3.69%, the S&P rose 2.92% and the Nasdaq rose 2.43%.
The yield on the benchmark 10-year U.S. Treasury note rose 1.3 basis points to 4.619%, slowing from a 14-month high of 4.809% hit earlier this week.
SLB helped lead the market after the oilfield services provider announced it would provide more cash to shareholders through dividends and share buybacks.
Big tech stocks also rallied on expectations that the US Federal Reserve could cut interest rates before the end of the year. In the bond market, U.S. Treasury yields remained relatively stable, but a sharp drop earlier in the week helped push up stocks.
The U.S. Federal Reserve is widely expected to keep interest rates on hold at its policy meeting later this month, with markets pricing in a more than 50% chance of cutting rates by at least 25 basis points through June, according to LSEG data.
