Market Momentum Shifts as S&P 500 Eyes First Gain Since Christmas
After a five-day losing streak, the S&P 500 is poised to break its downward trend, rising 0.6% in early trading on Friday. The Dow Jones Industrial Average followed suit, up 228 points, or 0.5%, while the Nasdaq composite saw a 0.8% increase.
Economic Uncertainty Looms
However, a report due later in the morning could alter the market’s trajectory. Economists predict that U.S. manufacturing will continue to contract, a sector heavily impacted by the Federal Reserve’s high interest rates aimed at curbing inflation.
Tesla Recovers, U.S. Steel Slumps
Tesla shares rebounded 0.8% after a 6.1% tumble the previous day, following news of lower-than-expected vehicle deliveries. On the other hand, U.S. Steel plummeted 5.2% after President Joe Biden blocked a proposed $15 billion deal with Japan’s Nippon Steel.
A Stellar Year, but Uncertainty Ahead
Despite a remarkable two-year run, U.S. stock indexes have lost some luster over the past week. The economy and job market remain strong, but the path forward is uncertain. The S&P 500’s record-breaking performance last year was fueled by expectations of interest rate cuts, but traders are now scaling back those expectations as inflation proves stubborn.
Tariffs and Inflation Concerns
Rising tariffs and policies from President-elect Donald Trump could put upward pressure on inflation, worrying investors. Critics argue that U.S. stock prices are overvalued, having risen faster than corporate profits. The threat of tariffs has also impacted global markets, particularly in China, where a struggling property market is already causing concern.
Global Markets React
Stocks in Shanghai tumbled 1.6%, while Hong Kong’s market climbed 0.7%. South Korea’s Kospi surged 1.8% after the acting president and finance minister pledged to stabilize the economy. European stock indexes were mostly lower, while Treasury yields held steady, with the 10-year yield at 4.56% and the two-year yield at 4.24%.
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