The markets rebounded sharply on Friday, with the Dow Jones Industrial Average surging nearly 500 points to cap off a volatile week dominated by inflation concerns and Federal Reserve policy adjustments. Cooler-than-expected inflation data helped restore some investor confidence after the index suffered its longest losing streak since the 1970s earlier in the week. The S&P 500 and Nasdaq Composite also posted solid gains, lifted by broad-based sector rallies led by real estate and information technology. Despite the upbeat session, all three major averages logged weekly losses, reflecting persistent caution as markets faced with economic uncertainty and mixed signals from global monetary policies.

Key Takeaways:

  • Dow Closes Nearly 500 Points Higher: The Dow Jones Industrial Average surged 498.02 points, or 1.18%, to close at 42,702.34 on Friday. This marked a sharp recovery from its earlier 1,100-point plunge on Wednesday, which had extended its losing streak to ten consecutive sessions—the longest since 1974. Despite Friday’s rally, the Dow ended the week down 2.3%, marking its third straight losing week.
  • S&P 500 and Nasdaq Also Rally: The S&P 500 climbed 1.09%, closing at 4,320.75, while the Nasdaq Composite advanced 1.03% to end at 14,173.65. Both indexes saw all 11 sectors post gains on Friday, led by real estate and information technology, with only 53 stocks in the S&P 500 closing lower. However, the weekly losses remained significant, with the S&P 500 down 2% and the Nasdaq slipping 1.8% amid a turbulent week of trading.
  • Cooling Inflation Offers Relief: November’s personal consumption expenditures price index—the Federal Reserve’s preferred inflation gauge—rose by 2.4% year-over-year, below economists’ expectations of 2.5%. Monthly inflation increased by just 0.1%, with core PCE, which excludes volatile food and energy prices, also up by 0.1% month-over-month and 2.8% annually. The figures provided some relief to markets worried about the Fed’s future rate policies.
  • European Markets Close Lower for the Week: The pan-European Stoxx 600 fell 0.78% on Friday, contributing to a 1.9% weekly decline. In the UK, the FTSE 100 dropped 2.6% for the week to close at 8,084.61. Germany’s DAX closed Friday down 0.43%, with the index finishing the week on a cautious note amid unexpected producer price increases of 0.1% for November. France’s CAC 40 fell 0.3% on Friday, extending losses from earlier in the week and reaching its lowest point in nearly three weeks, driven by declines in key sectors. Italy’s FTSE MIB finished marginally down at 33,766.3, marking its lowest level since early December and recording back-to-back sessions of losses.
  • Asia-Pacific Markets Mostly Decline: Asia-Pacific markets saw mixed performance on Friday as regional inflation data and central bank decisions shaped sentiment. Japan’s Nikkei 225 dropped 0.29% to 38,701.9, pressured by a core inflation rate of 2.7% year-over-year for November, slightly above expectations. The Topix index also fell 0.44% to close at 2,701.99. In South Korea, the Kospi fell 1.3% to end at 2,404.15, while the small-cap Kosdaq tumbled 2.35% to 668.31, leading the region’s losses. Australia’s S&P/ASX 200 dropped 1.24% to 8,067, marking its lowest close since September. Meanwhile, China’s CSI 300 declined 0.45% to 3,927.74, as the People’s Bank of China kept its one-year and five-year loan prime rates steady at 3.1% and 3.6%, respectively. Hong Kong’s Hang Seng Index was flat in late trading, offering some stability despite the broader regional downturn.
  • Oil Prices Steady Amid Market Uncertainty: Brent crude futures edged up 6 cents, or 0.08%, to close at $72.94 per barrel on Friday, while West Texas Intermediate crude gained 8 cents, or 0.12%, to $69.46. Both benchmarks ended the week down 2.5%, reflecting cautious market sentiment amid cooling US inflation data and expectations for a potential oil surplus in 2025.
  • Treasury Yields Retreat After Inflation Data: The yield on the 10-year Treasury fell 4.4 basis points to 4.526% after surpassing 4.57% earlier in the week. Meanwhile, the 2-year Treasury yield dipped slightly, settling at 4.314%. 

FX Today:

  • EUR/USD Faces Downward Pressure Amid USD Strength: EUR/USD traded at 1.0429, stabilising slightly after recent declines but remaining under pressure as safe-haven demand buoyed the US Dollar. The pair struggled to break above key resistance levels, with its 50-day, 100-day, and 200-day SMAs all trending downward, reflecting a bearish outlook. Immediate support was tested near 1.0350, where buyers provided temporary relief. However, sustained weakness below this level could lead to further losses, targeting 1.0300 and 1.0250. On the upside, a break above the 50-day SMA near 1.0643 could ease selling pressure and shift the momentum.
  • GBP/USD Attempts Recovery Amid Consolidation: GBP/USD traded at 1.2567, showing signs of consolidation after finding support near the 200-day SMA around 1.2500. While the pair has held above this critical level, the broader trend remains cautious as bearish momentum lingers. Immediate resistance lies at the 50-day SMA at 1.2793, followed by the 100-day SMA at 1.2947. A break above these levels could signal a stronger recovery. On the downside, a sustained break below 1.2500 could push the pair towards 1.2400 and beyond.
  • USD/CHF Stays Subdued Despite Hints of Uptrend: USD/CHF traded near 0.8925, retreating slightly after recent gains. The pair remained above its 50-day, 100-day, and 200-day SMAs, suggesting continued upward momentum. Resistance at 0.9000 proved significant, with sellers emerging near this level. A decisive break above 0.9000 could pave the way toward 0.9050 and higher. Conversely, a fall below the 50-day SMA at 0.8783 might signal a deeper pullback, targeting 0.8650.
  • AUD/USD Slips Amid Persistent Downtrend: AUD/USD remained under pressure, trading around 0.6246, unable to break above key resistance levels. The pair’s 50-day, 100-day, and 200-day SMAs all pointed downward, underscoring a sustained bearish bias. Immediate support was found near the psychological level of 0.6200, but a break below this level could accelerate losses toward the 0.6150 region and beyond. On the upside, resistance at the 50-day SMA near 0.6513 remained a critical hurdle for any recovery attempts.
  • USD/JPY Tests Resistance Amid Volatility: USD/JPY traded at 156.36, facing resistance near recent highs as upward momentum showed signs of exhaustion. The pair held above its 50-day, 100-day, and 200-day SMAs, reflecting an ongoing bullish trend. Sellers emerged around 157.00, a level that has limited further gains. Key resistance remains at 157.50, with a potential breakout targeting 160.00. On the downside, support is seen at the 50-day SMA near 152.62, with a break below potentially leading to a deeper correction toward 150.00.
  • Gold Consolidates Amid Bullish Momentum: Gold prices traded at $2,622, maintaining a bullish trajectory despite recent volatility. The precious metal found strong support near the 100-day SMA at $2,607, which has consistently acted as a key level for buyers. Immediate resistance is located at the 50-day SMA near $2,668. A break above this level could push gold toward $2,700 and beyond, reinforcing the bullish trend. However, a failure to hold above $2,607 could lead to a pullback toward the 200-day SMA at $2,472.

Market Movers:

  • Novo Nordisk Plummets on Obesity Drug Data: Shares of Novo Nordisk tumbled 18% following disappointing late-stage trial results for its experimental CagriSema weight-loss drug. The weaker-than-expected data sparked a sell-off, dragging down the stock significantly. Meanwhile, shares of rival Eli Lilly, a major player in the obesity drug market, gained 1% as investors shifted focus. Dexcom, a maker of diabetes management devices, added nearly 6%, benefitting from the news.
  • Mission Produce Surges on Strong Results: Avocado producer Mission Produce soared 17% after delivering better-than-expected fiscal fourth-quarter results. The company’s robust performance boosted investor confidence, making it one of the day’s biggest gainers.
  • Occidental Petroleum Rises on Berkshire Hathaway Purchases: Shares of Occidental Petroleum climbed nearly 4% after a regulatory filing revealed that Warren Buffett’s Berkshire Hathaway had increased its stake in the company. 
  • Sirius XM Soars After Berkshire Hathaway Stake Increase: Sirius XM shares jumped 12% following news that Berkshire Hathaway had also increased its stake in the satellite radio company. The filing triggered a wave of buying interest, propelling the stock to one of its largest single-day gains in months.
  • Carnival Cruises Gains on Strong Demand Outlook: Carnival Corporation rose more than 6% after the company reported stronger-than-expected fiscal fourth-quarter earnings. The company also provided a bullish outlook for demand in 2025 and 2026, further boosting investor confidence.

As the week concluded, markets showed mixed signals amid cooling inflation data and ongoing global economic uncertainties. The Dow Jones ended its tumultuous week on a high note with a nearly 500-point gain, while the S&P 500 and Nasdaq also posted strong rallies, though all three indices logged weekly losses. European markets faced downward pressure, with the Stoxx 600 and major regional indices ending the week in the red, as political and monetary policy concerns weighed heavily. In Asia, most markets struggled, with Japan’s Nikkei and South Korea’s Kospi leading declines, while Chinese equities offered some stability. Oil prices steadied as investors assessed Chinese demand. With the Federal Reserve’s inflation gauge showing cooler-than-expected numbers, markets may find some relief heading into the holiday period, though uncertainty continues to cloud the broader outlook.