Wall Street Ends Week on an Upbeat Note as Manufacturing Signs Improve
The US stock market rose on Friday, ending the first week of 2025 on a positive note as new signs of stabilizing manufacturing activity brought an end to several days of losses. The S&P 500 ended the day up 1.3%, its biggest gain since November 6, while the tech-heavy Nasdaq rose 1.8%.
The rally came as a combination of factors, including the latest reading of US manufacturing activity beating consensus forecasts, boosting investor sentiment, and the re-election of Trump ally Mike Johnson as speaker of the US House of Representatives.
“Today’s move is really a combination 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.”
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. This positive news on the manufacturing front contributed to the upbeat mood.
The big technology companies that have dominated the US stock market, also known as the “Big Seven,” remain resilient even with high valuations. Investors remain confident in huge spending and artificial intelligence investments, which they believe will pay dividends and ensure first-mover advantage.
Even after Friday’s sharp gains, the S&P and Nasdaq still posted modest weekly losses. However, Invesco’s Hooper believes that the overall environment is favorable for risk assets, and she expects to see more positive days ahead.
“I think it’s likely there will be more volatility,” she said. “Let’s face it: There’s more and more uncertainty, and as we get closer to January 20th, I think what the new administration might do, it’s going to be more question marks that appear.”
FAQ:
Q: What was the reason for the rise in the US stock market on Friday?
A: The rise was due to a combination of factors, including positive manufacturing data and the re-election of Trump ally Mike Johnson as speaker of the US House of Representatives.
Q: What is the ISM manufacturing purchasing managers’ index?
A: The ISM manufacturing purchasing managers’ index is a report that measures the level of expansion or contraction in the US manufacturing sector. A reading above 50 indicates expansion, while a reading below 50 indicates contraction.
Q: What is the significance of the “Big Seven” technology companies?
A: The “Big Seven” technology companies, including companies like Tesla and Nvidia, have dominated the US stock market and remain resilient even with high valuations. Investors remain confident in their investments in artificial intelligence and expect them to pay dividends.
Conclusion:
The US stock market ended the first week of 2025 on a positive note, driven by positive manufacturing data and the re-election of Trump ally Mike Johnson as speaker of the US House of Representatives. Despite the modest weekly losses, analysts believe that the overall environment is favorable for risk assets and expect more positive days ahead. However, they also caution that uncertainty is on the rise, particularly as the new administration takes office on January 20th.
