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Stock Market Today: Wall Street Ends the Week with Gains Despite Challenges

Emailinbox@123January 10, 20252 Mins read

U.S. stocks bounced back on Friday, easing what could have been one of the toughest weeks for the market this year into a merely difficult one.

The S&P 500 gained 1.1%, marking its strongest day in six weeks and trimming the week’s loss to 2%. The Dow Jones Industrial Average soared 498 points (1.2%), while the Nasdaq composite added 1%, driven largely by Big Tech names like Nvidia.

This recovery came after data revealed that a key inflation measure preferred by the Federal Reserve came in slightly lower than expected last month. This data offered some relief amid concerns about persistent inflation, which had previously climbed to a peak above 9%.

Fed Signals Fewer Interest Rate Cuts

Federal Reserve Chair Jerome Powell cited inflation concerns earlier this week as a key reason why the central bank might implement fewer interest rate cuts in 2025 than previously anticipated. Traders, who had anticipated multiple cuts, are now adjusting expectations. CME Group data shows most traders are forecasting one or two rate reductions—or possibly none—next year.

Brian Jacobsen, chief economist at Annex Wealth Management, commented, “When market optimism is high, it doesn’t take much fear to shake investor confidence.”

Inflation Data and Market Reactions

The better-than-expected inflation figures prompted traders to slightly reduce bets against any cuts in 2025, now assigning a 16% chance of zero rate reductions. Lower interest rates can stimulate the economy by reducing borrowing costs but may also reignite inflationary pressures.

Wall Street’s recent surge to 57 record highs this year has been largely driven by the assumption of consistent rate cuts, but Powell’s comments dampened that enthusiasm.

Political Uncertainty Clouds the Market

Adding to market jitters, the House of Representatives decisively rejected President-elect Donald Trump’s proposed plan to avoid a government shutdown. This development underscores potential political gridlock, even with Republicans controlling Congress and the White House.

Economic optimism following Trump’s election, which had previously bolstered hopes for faster growth and deregulation, is now facing headwinds. Concerns over potential trade wars, higher inflation, and increased national debt are weighing on investor sentiment.

Carl B. Weinberg of High Frequency Economics highlighted the challenges ahead, writing, “The coming year brings significant uncertainties, from U.S. politics to global trade wars and geopolitical tensions.”

Winners and Losers in the Market

Despite these headwinds, most S&P 500 stocks ended the day higher. Cruise lines, including Carnival and Norwegian Cruise Line, surged after Carnival exceeded profit expectations and projected continued growth into 2025. Carnival’s CEO Josh Weinstein credited robust demand and higher pricing for the strong performance.

Eli Lilly rose 1.3% following disappointing news from competitor Novo Nordisk regarding its weight-loss treatment. The setback for Novo Nordisk could benefit Eli Lilly’s Zepbound, an obesity treatment.

Meanwhile, U.S. Steel dropped 5% after forecasting weaker-than-expected fourth-quarter results, citing depressed steel prices. Nike saw a slight dip of 0.2%, even after reporting better-than-expected profits. Analysts noted that near-term costs associated with the company’s turnaround strategy, led by CEO Elliott Hill, could weigh on results.