Jamie Spencer
US stocks bounced back strongly on Friday, recovering from a tumultuous week as investors responded to inflation data that showed price increases slowing in November. The report brought some optimism to markets rattled by the Federal Reserve’s cautious stance on interest rate cuts for 2025 and geopolitical uncertainties.
Markets Rebound on Inflation News
The Nasdaq Composite (^IXIC) surged 1.6%, while the S&P 500 (^GSPC) gained 1.7%, and the Dow Jones Industrial Average (^DJI) climbed 1.8%. The rally followed the release of the core Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation gauge, which showed price growth cooling more than expected on a monthly basis.
Though inflation remains above the Fed’s 2% target, the report hinted at potential progress in the central bank’s efforts to rein in price pressures.
Week of Uncertainty
The recovery in equities came after a Fed-induced sell-off earlier in the week, which saw markets slump on news that policymakers now project only two rate cuts for 2025, down from four forecasted in September. Global markets were further pressured Friday morning by the looming threat of a US government shutdown and renewed tariff threats from President-elect Donald Trump.
In a post on Truth Social, Trump warned European nations of potential tariffs if they do not address trade imbalances with the US:
“I told the European Union that they must make up their tremendous deficit with the United States by the large-scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!”
Sector and Market Movements
The tech sector, often sensitive to shifts in inflation and interest rate expectations, led Friday’s gains. Global chip stocks initially sold off but recovered later in the day. European semiconductor giant ASML (ASML) dipped slightly in morning trading, while Taiwan’s TSMC (TSMC34.SA) fell less than 1%.
In cryptocurrency markets, Bitcoin (BTC-USD) dropped to around $97,000 per token amid record ETF outflows, signaling volatility in digital assets despite broader market gains.
Meanwhile, Novo Nordisk (NVO), known for its groundbreaking obesity treatments, suffered a dramatic 20% drop—the steepest in over two decades—after its latest drug trial failed to meet investor expectations.
Looking Ahead
Despite Friday’s recovery, markets remain in a precarious position heading into next week. Persistent inflation, geopolitical tensions, and uncertainty over the Fed’s monetary policy trajectory could keep investors cautious.
As traders digest the implications of inflation trends and Trump’s renewed tariff threats, the focus will likely shift to upcoming economic data and corporate earnings.
