Market Sentiment Shifts as Investors Show Renewed Assurance in US Economic Outlook

Friday’s trading session ended on a subdued note, with major indices posting minor declines despite a strong weekly performance. The Nasdaq 100 wrapped up with losses of -0.05%, while the S&P 500 dipped -0.03% and the Dow Jones Industrials fell -0.04%. However, when viewed through a weekly lens, the picture brightened considerably—the S&P 500 climbed +1.4% and the Nasdaq 100 surged +1.2%, buoyed by growing investor optimism surrounding America’s economic resilience.

The primary catalyst for this upbeat market tone stems from robust Q3 GDP figures. Data released on Tuesday revealed that US real GDP expanded by +4.3% on a quarter-over-quarter annualized basis, substantially outpacing the consensus estimate of +3.3%. This better-than-expected performance reinvigorated investor appetite and provided the foundational confidence that propelled equities higher throughout the week.

Interest Rate Environment Provides Support

Bond markets offered subtle encouragement to equities, with the 10-year Treasury note yield declining -0.6 basis points to settle at 4.128%. This pullback reflected a -2.5% decline in crude oil prices and a -1.2 bp decrease in breakeven inflation expectations, which compressed to 2.225%. Meanwhile, market participants have begun pricing in a 20% probability of a -25 basis point rate reduction at the Federal Reserve’s upcoming January 27-28 meeting, compared to just 13% odds earlier in the week.

Sector-Specific Performance Reveals Mixed Signals

The Magnificent Seven technology stocks exhibited divergent performance trajectories. Nvidia advanced +1.0% following announcements of a strategic licensing agreement with AI startup Groq, integrating their inference and low-latency chip capabilities into Nvidia’s ecosystem. Conversely, Tesla declined -2.10%, and four additional mega-cap tech stocks closed in negative territory.

Within the semiconductor industry, Nvidia’s upside leadership contrasted with weakness elsewhere. Asml Holding and Broadcom edged up +0.6%, whereas Arm Holdings and NXP Semiconductors retreated more than -1%.

Cryptocurrency-exposed equities faced headwinds, with Bitcoin trading lower by approximately -0.4%. Galaxy Digital Holdings plummeted more than -4%, while Mara Holdings and Riot Platforms each fell exceeding -3%. Coinbase Global declined -1.2%.

Energy stocks underperformed across the board due to crude oil’s sharp -2.4% slide. Devon Energy and Marathon Petroleum both dropped more than -1%.

Mining equities captured significant strength as precious metals reached all-time peaks. Coeur Mining and Freeport McMoRan surged more than 2%, while Hecla Mining and Newmont Mining rallied +1% or higher. Target closed up more than +3% following reports that activist investor Toms Capital Investment Management has accumulated a material stake.

Geopolitical and Seasonal Tailwinds

Precious metals including gold, silver, and platinum achieved record highs on Friday, supported by early dollar weakness and mounting geopolitical uncertainties. The US conducted military operations against ISIS targets in Nigeria through collaboration with Nigerian security forces. Separately, US Coast Guard actions forced the sanctioned tanker Bella 1 to abandon its course toward Venezuela and redirect into the Atlantic Ocean.

On the diplomatic front, Ukrainian President Zelensky indicated expectations for a Sunday meeting with President Trump in Florida to advance a 20-point peace framework that is reportedly 90% finalized.

Seasonally, equity markets have demonstrated strong historical tailwinds. According to Citadel Securities data extending back to 1928, the S&P 500 has advanced in 75% of trading instances during the final two weeks of December, posting an average gain of 1.3%.

Global Markets Conclude Week on Positive Note

International equity benchmarks closed higher. China’s Shanghai Composite extended gains for an eighth consecutive session, rising +0.10%, while Japan’s Nikkei Stock 225 advanced +0.68%. European markets observed holiday closures on Friday.