Market Rally: Stocks Rebound After Rough Week
The US stock market is experiencing a much-needed resurgence, with the S&P 500 surging 1.2% and on track for its best day in six weeks. The Dow Jones Industrial Average is up 515 points, or 1.2%, while the Nasdaq composite has gained 1.1%. This upward trend is a welcome relief after a tumultuous week that saw stocks plummet.
Eli Lilly and Nvidia Lead the Charge
Eli Lilly is one of the top performers, with its stock climbing 4.9% after a rival’s update on a potential weight-loss treatment fell short of expectations. This could benefit Eli Lilly’s Zepbound, which helps treat obesity. Meanwhile, Nvidia is also driving the market upward, rising alongside the broader market after a report showed a key measure of inflation was lower than expected last month.
Inflation Fears Ease
The report’s findings are an encouraging sign, suggesting that inflation may not be as stubborn as previously thought. This news has helped alleviate concerns that the Federal Reserve may not deliver the expected rate cuts next year. Fed Chair Jerome Powell had warned earlier this week that higher inflation could limit the central bank’s ability to cut interest rates.
Market Volatility Ahead
Despite the current rally, experts warn that the market remains vulnerable to drops. “When optimism is rising and market multiples are expanding, it just takes a little fear to take the veneer off a market rally,” notes Brian Jacobsen, chief economist at Annex Wealth Management. With the House of Representatives rejecting President-elect Donald Trump’s plan to keep the US government fully running, uncertainty looms over Washington’s ability to function smoothly.
Global Economic Challenges Ahead
Carl B. Weinberg of High Frequency Economics predicts that 2025 will be a year of significant challenges for the global economy, citing US political uncertainty, expected global trade wars, and geopolitical uncertainty. “We do not look forward to these changes,” he wrote in a note to clients.
Winners and Losers
In addition to Eli Lilly and Nvidia, cruise lines are also experiencing a boost, with Carnival and Royal Caribbean rising 3.7% after Carnival reported strong profit expectations. On the other hand, U.S. Steel sank 3.1% after announcing that its fourth-quarter results will likely fall below expectations, while Novo Nordisk’s stock plummeted 20.6% after an update on its weight-loss treatment. Nike fell 1.3% despite reporting better-than-expected profits, as analysts predict that changes by its new CEO will cut into financial results in the near term.
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