The U.S. stock market ended a mixed trading session on Friday, with major indices showing minimal movement. While the Nasdaq Composite recorded its fourth consecutive week of gains, the Dow Jones Industrial Average and S&P 500 posted slight declines. This divergence reflects shifting investor sentiments amid economic data and expectations for the Federal Reserve’s upcoming monetary policy decision.
Market Performance Summary
On Friday, the Dow Jones Industrial Average fell by 86.06 points, or 0.20%, to close at 43,828.06. The S&P 500 remained nearly flat, slipping just 0.16 points to end at 6,051.09. Meanwhile, the Nasdaq Composite gained 23.88 points, or 0.12%, closing at 19,926.72.
Despite Friday’s lackluster session, the Nasdaq’s performance has been bolstered by continued interest in technology stocks, helping the index maintain positive momentum for the fourth straight week.
Tech Stocks Drive Gains Amid Mixed Performance in Semiconductors
Technology stocks remained a key driver of market performance, with notable contributions from chipmakers. Broadcom’s shares surged by 24% after the company projected stronger-than-expected quarterly revenue and highlighted robust demand for its AI-focused custom chips. The upbeat forecast propelled Broadcom’s market capitalization past the $1 trillion mark for the first time.
Competitors in the semiconductor space saw mixed outcomes. Marvell Technology’s stock climbed 10.8% after delivering strong results, while Nvidia, a key player in AI and GPUs, saw its shares decline by 2.2%. Overall, the semiconductor index recorded a 3.2% gain, reflecting the sector’s resilience despite varied performances among individual players.
Bond Yields Rise, Impacting Value Stocks
U.S. Treasury yields increased across the board on Friday, with the benchmark 10-year yield reaching a three-week high. This development weighed on value and income stocks, which often face headwinds in a rising rate environment.
“Right now, the interest rate selloff is dominating the market,” said Jay Hatfield, CEO of Infrastructure Capital Management. “It’s typical to see value stocks underperform when tech stocks are gaining traction.”
Key Drivers of the Week: Fed Policy and Inflation Data
Investors kept a close eye on inflation data released earlier in the week, which aligned with expectations and reinforced the market’s anticipation of a 25 basis-point interest rate cut by the Federal Reserve in its December 17-18 meeting. According to the CME FedWatch Tool, there is a 97% probability of a rate cut, although the likelihood of further cuts in January remains uncertain.
The Nasdaq broke through the 20,000-point barrier earlier in the week, marking a significant milestone fueled by optimism around cooling inflation and the Federal Reserve’s potential pivot to a more accommodative stance.
Weekly Market Trends and Notable Movers
The broader market saw mixed results throughout the week. The Dow and S&P 500 struggled to maintain upward momentum, posting weekly declines, while the Nasdaq emerged as a standout performer.
Key Gainers and Losers:
- Broadcom Inc.: Shares skyrocketed by 24%, driven by its strong AI chip demand forecast.
- Marvell Technology: Rose 10.8%, reflecting investor confidence in its growth trajectory.
- Nvidia Corp.: Fell 2.2%, underscoring volatility in the AI sector.
- RH (Restoration Hardware): Jumped 16.95% after reporting better-than-expected third-quarter revenue.
- D.R. Horton: Dropped 0.89% following a downgrade by J.P. Morgan to “underweight.”
Market Breadth and Trading Volume
Declining stocks outnumbered advancing ones on the New York Stock Exchange (NYSE) by a ratio of 2.23-to-1. The S&P 500 recorded eight new 52-week highs and 15 new lows, while the Nasdaq Composite posted 75 new highs against 199 new lows.
Friday’s trading volume on U.S. exchanges was 12.56 billion shares, below the 20-day average of 14.03 billion shares, highlighting a relatively subdued trading session.
Looking Ahead
As markets prepare for the Federal Reserve’s policy decision next week, investor focus will remain on interest rate movements and their impact on various sectors. The tech-heavy Nasdaq is expected to maintain its upward momentum, fueled by strong demand for AI-driven innovations. However, continued volatility in bond yields could weigh on value stocks, creating a nuanced landscape for investors.
Stay tuned for updates as Wall Street reacts to shifting economic conditions and the Federal Reserve’s direction in the coming weeks.