- The S&P 500 surged 4% this week, marking the best week of gains since the November election.
- Declining interest rates and a cooler-than-expected inflation report fueled renewed optimism.
- Investors are preparing for the coming Trump administration, with inauguration day set for Monday.
US stocks surged on Friday, capping off the best week for stocks since the November election.
The S&P 500, Nasdaq 100, and Dow Jones Industrial Average all gained over 3% for the week. Friday's 1% gain for the major averages capped off the final trading day of Joe Biden's presidency.
President-elect Donald Trump will take office on Monday.
Stocks and bonds rallied after the December CPI inflation report came in below economist estimates.
The data renewed hope among investors that the Federal Reserve would move forward with more interest rate cuts this year.
The 10-year yield was about flat on Friday but declined by about 20 basis points since hitting a 52-week high of 4.82% on Tuesday.
Here's where US indexes stood at the 4:00 p.m. closing bell on Friday:
- S&P 500: 5,996.66, up 1%
- Dow Jones Industrial Average: 43,487.83, up 0.78% (+334.70 points)
- Nasdaq composite: 19,630.20, up 1.51%
According to the CME FedWatch Tool, the odds of two 25-basis point interest rate cuts by the end of the year have jumped to 30%, up from 22% a week ago.
Rate cut bets were fueled further this week by Federal Reserve Governor Christopher Waller, who told CNBC on Thursday that interest rates could be cut multiple times this year, with the first cut coming in the first half.
"As long as the data comes in good on inflation or continues on that path, then I can certainly see rate cuts happening sooner than maybe the markets are pricing in," Waller said.
Investors got the first taste of fourth-quarter earnings this week, with the major US banks reporting blowout numbers. Shares of major banks including JPMorgan Chase, Citi, and Wells Fargo ended the week sharply higher, up about 10%.
The earnings mania will continue next week, with major companies including Netflix, United, Procter & Gamble, and Johnson & Johnson set to report results.
The stock market is closed on Monday, January 20, in observance of Martin Luther King Jr. Day.
Here's what else happened today:
- We're starting to get a better idea of what Trump's crypto plans will look like.
- Howard Marks is officially on bubble watch for the stock market, but said one key ingredient is missing.
- Capital One is having a tough week.
- Amazon's full return-to-office mandate is off to a bumpy start.
- Everything we know about a possible TikTok ban — and the last minute efforts to stop it.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil dropped 0.49% to $77.47 a barrel. Brent crude, the international benchmark, was lower by 0.59%, at $80.81 a barrel.
- Gold declined 0.42% to $2,739.40 an ounce.
- The 10-year Treasury yield was about flat at 4.614%.
- Bitcoin jumped 4.62% to $104,594.