Investing.com -- Stocks closed higher on Friday as Wall Street bounced back from a rough start to the year.
The S&P 500 rose 73.92 points, or 1.26%, to finish at 5,942.47. The Dow Jones Industrial Average added 339.86 points, or 0.8%, closing at 42,732.13. The Nasdaq Composite climbed 340.88 points, or 1.77%, ending the day at 19,621.68.
Technology stocks stood out, with Nvidia (NASDAQ:NVDA) gaining 4.7% and Super Micro Computer (NASDAQ:SMCI) surging 10.9%.
Friday’s gains ended a five-day losing streak for the Nasdaq and S&P 500. However, the rally wasn’t enough to pull the major indexes into positive territory for the week. The S&P 500 slipped 0.48% over the week, while the Dow dropped 0.60%. The Nasdaq Composite was down 0.51%.
The week ahead: December jobs data, FOMC minutes
The ISM services index on Tuesday and the employment report on Friday as the key economic releases this week. Moreover, the minutes from the December FOMC meeting are set to be published on Wednesday.
Citi strategists project the addition of 120,000 new jobs in December, with the unemployment rate expected to climb to 4.4%. However, they note that the risks lean towards weaker employment figures.
“With Treasury real yields and the dollar at recent highs – despite 100bp of Fed rate cuts – the economy should continue to cool until the Fed resumes cutting policy rates,” strategists led by Andrew Hollenhorst said in a note.
"Over the next few months, we expect attention to shift away from inflation and back toward the still softening labor market,” they added.
As for the December FOMC minutes, Citi expects the release to reflect the overall hawkish tone, noting that four Fed officials opposed rate cuts and expressed concerns over stubbornly high inflation. However, the minutes are also likely to highlight that most officials anticipate further rate reductions ahead.
Strategists believe that as inflation trends towards 2% and the labor market continues to weaken, the Fed may implement rate cuts more aggressively and deeply than markets currently expect.
This week will also feature a few earnings reports, with Delta Air Lines (NYSE:DAL) and Walgreens Boots Alliance (NASDAQ:WBA) set to release their results on Friday.
What analysts are saying about US stocks
Morgan Stanley (NYSE:MS): “Equities are rate-sensitive again as the 10-year yield has pushed through the 4.50% threshold we highlighted. This has driven narrower breadth recently. We favor the quality factor and industries showing strong EPS revisions ( Software (ETR:SOWGn), Financials, and Media & Entertainment).”
JPMorgan (NYSE:JPM): “We think that the repeat of 2017 performance is unlikely, given starting stretched positioning, as well as lack of fiscal room to manoeuvre, with bond yield levels much different to 2016, but the better economic activity and the deregulation drive remain the supports. We stay bullish on the US vs Eurozone and vs EM equities, despite what is an already exceptional relative regional outperformance.”
UBS: “In US equities, notwithstanding fewer likely rate cuts, we see a favorable backdrop ahead—driven by a mixture of lower borrowing costs, resilient US activity, a broadening of US earnings growth, further AI monetization, and the potential for greater capital market activity under a second Trump administration. We expect the S&P 500 to hit 6,600 by end-2025 and suggest that under-allocated investors consider using any near-term turbulence to add to US stocks, including through structured strategies.”
Evercore ISI: “Surge in AI mentions across Corporate America, strong Hyper-Scaler Capex, and record Google (NASDAQ:GOOGL) searches reflect large enthusiasm over AI. Adoption remains muted, though nearing Inflection.”
“AI convex names, “Enablers, Adopters and Adaptors” remain core to a portfolio positioned for 6,800 in the S&P 500 by 12/31.”