S&P 500 Breaks Five-Day Losing Streak, Tech Stocks Lead the Rally

The S&P 500 is set for its first gain since Christmas, signaling a potential market recovery after its longest losing streak since April. The index is up 1% in midday trading on Friday. The Dow Jones Industrial Average also saw an uptick, gaining 263 points or 0.6%, while the Nasdaq Composite surged 1.4%.

Technology stocks are playing a key role in driving the market upward. Nvidia is up 4%, making it the strongest force pushing the S&P 500 higher. The growth stock has been closely watched amid concerns over soaring prices for tech stocks in the artificial intelligence (AI) boom. Some experts believe that the AI rally still has room to run, despite the easier gains being behind us, according to Solita Marcelli, Chief Investment Officer for UBS Global Wealth Management.

“While the easy gains in AI may be behind us, we think this rally looks far from over,” she said.

Super Micro Computer, a maker of servers used for AI, is up 6.2%. The company's strong earnings and upbeat outlook for 2025 have also contributed to the stock's rise.

Tesla is also adding to the market's upward momentum, rising 4.2% after suffering a 6.1% loss the previous day. The electric vehicle maker had reported lower-than-expected vehicle deliveries in the last quarter of 2024.

On the other hand, Rivian is surging 21.6% after surpassing delivery expectations, with over 14,000 vehicles delivered during the quarter. The company also announced plans to increase production capacity at its Illinois plant.

U.S. Steel, however, is seeing a 6.2% drop after President Joe Biden blocked a $15 billion acquisition deal proposed by Japan’s Nippon Steel, citing national security concerns. The deal would have seen Nippon Steel acquire the Pittsburgh-based steel giant.

Shares of beer, wine, and liquor companies are also dropping following a warning from U.S. Surgeon General Vivek Murthy about the link between alcohol consumption and an increased risk of cancer. Murthy has called for updated health warning labels on alcoholic beverages and a reassessment of alcohol consumption guidelines.

Molson Coors Beverage fell 2.8%, while Brown-Forman, the distillery behind Jack Daniel’s, lost 1.6%.

Despite a solid economy and a relatively strong job market, concerns about inflation and future interest rate hikes are causing unease in the markets. Traders have begun reducing their expectations for interest rates cuts in 2025, as inflation remains persistent. The Federal Reserve is continuing its efforts to reach the 2% inflation target, but it has faced challenges in the process.

Some analysts also worry that policies under President-elect Donald Trump, including potential tariffs, could further fuel inflation. As a result, critics argue that U.S. stock prices have become too expensive, given the gap between stock market growth and corporate profit growth.

Globally, stock markets faced pressure. In China, stocks tumbled by 1.6% in Shanghai, bringing the week’s losses to 5.6%. However, Hong Kong stocks managed to recover slightly, climbing 0.7% to reduce the weekly loss to under 2%. European stock markets also saw declines.

In South Korea, the Kospi index jumped 1.8% after the acting president and finance minister promised additional measures to stabilize the economy amid a political crisis, which has seen two heads of state impeached in under a month.

In the bond market, Treasury yields remained relatively steady. The 10-year Treasury yield edged up slightly to 4.57%, while the two-year Treasury yield, which closely tracks Fed action, held at 4.25%. A recent report from the Institute for Supply Management showed that U.S. manufacturing remains in contraction, but the situation was less severe than expected, providing some relief for investors concerned about the high interest rates affecting the sector.

As the year continues, Wall Street’s performance reflects a delicate balance between economic growth, inflation concerns, and interest rate expectations. Investors are watching for signals on the path forward.