Tech Surge Powers Markets Higher as Investors Digest Mixed Economic Signals

Stock indexes staged a impressive finish to the week on Friday, with the Nasdaq 100 leading the charge by climbing +1.31%, while the S&P 500 advanced +0.88% and the Dow Jones Industrials gained +0.38%. Futures also reflected the bullish momentum, as March E-mini Nasdaq contracts rose +1.28% and March E-mini S&P futures climbed +0.87%. The catalyst behind the market strength was unmistakable: a powerful rally in cloud infrastructure and semiconductor stocks that reignited investor confidence across the broader market.

Individual Stock Performance Drives Market Direction

Cloud infrastructure names were the standout performers, with Applied Digital surging +16%, CoreWeave jumping +23%, and Nebius Group climbing more than +15% as these names bounced back from recent profit-taking. The semiconductor complex was equally impressive, led by Micron Technology’s +7% gain, followed by Advanced Micro Devices (+6%), Nvidia (+3%), and Broadcom (+3%). Other chip heavyweights including ASML, NXP, Lam Research, and KLA all posted gains exceeding +1%, demonstrating broad-based strength in the sector that traditionally signals healthy market conditions.

Oracle emerged as a notable winner, closing more than +7% higher after the company announced binding agreements to establish a US joint venture following TikTok CEO Chew’s comments about the corporate structure. Cryptocurrency-exposed equities also participated in the rally, with Bitcoin climbing beyond $88,700. This digital asset strength rippled through related stocks, as Riot Platforms surged more than +8%, Galaxy Digital climbed more than +6%, and Mara Holdings advanced more than +4%.

Beyond technology, other pockets of strength appeared across the market. Carnival led cruise line stocks with a +9% gain following better-than-expected Q2 earnings, while Whitefiber Inc jumped more than +18% on news of a substantial $865 million co-location agreement.

Economic Data Sends Mixed Signals

Friday’s economic calendar presented a complicated picture for investors. Existing home sales for November climbed to a nine-month high of 4.13 million units, though falling slightly short of the 4.15 million forecast. However, the University of Michigan’s consumer sentiment index for December painted a less encouraging picture, being unexpectedly revised downward to 52.9 from the preliminary reading of 53.3, missing the consensus expectation of 53.5. Adding to inflation concerns, one-year inflation expectations were revised upward to 4.2% from the prior 4.1%.

Despite this mixed backdrop, New York Fed President John Williams delivered comments that supported equity valuations, stating that recent economic data appears “pretty encouraging” with no signs of sharp deterioration in employment figures. Williams also indicated that US economic growth could reach 1.5% to 1.75% this year with acceleration expected in 2026, while noting there’s “no urgency” for additional monetary policy adjustments at present given the impact of previous rate cuts.

Bond Markets Feel the Pressure

Government bond prices retreated under multiple headwinds. The 10-year Treasury yield climbed +2.7 basis points to 4.149%, weighing on bond values. International developments added additional pressure, as Japan’s 10-year government bond yield surged to a 26-year high of 2.025% following the Bank of Japan’s rate increase announcement and hawkish forward guidance. European government bonds also came under selling pressure, with the German 10-year bund yield reaching a nine-month peak of 2.895% and the UK 10-year gilt yield rising +4.3 basis points to 4.524%.

The steepening yield curve—where short-term rates remain elevated relative to longer-term rates—continued to pressure longer-dated securities, particularly following last Wednesday’s Federal Reserve announcement to begin purchasing up to $40 billion in short-term Treasury bills monthly to support financial system liquidity.

Earnings Miss Creates Downside Pressure

Not all stocks moved higher. Nike tumbled more than -10%, the session’s worst performer in the Dow, after management guided for Q3 revenue declines in the low single digits and projected gross margin compression of 175 to 225 basis points due to persistent weakness in the Chinese market. KB Home, the homebuilder, fell more than -8% following Q4 results that disappointed investors, with the company guiding 2026 housing revenue expectations below consensus levels. Lamb Weston Holdings plummeted more than -25% to lead S&P 500 losers after issuing full-year sales guidance that came in below market expectations.

Market Mechanics: Triple Witching Effects

Friday’s session experienced outsized volatility and potentially exaggerated price moves due to the expiration of options, futures, and equity derivatives in the quarterly event known as triple witching. According to Citigroup research, a record $7.1 trillion in notional open interest was scheduled to roll off the US options market, suggesting that some of the day’s trading activity may have been mechanically driven rather than purely fundamental in nature.

Looking Ahead

Markets are currently pricing in only a 22% probability of a 25 basis point rate cut by the Federal Reserve at its January 27-28 policy meeting. Global equities also participated in Friday’s rally, with China’s Shanghai Composite climbing to a one-week high (+0.36%), Europe’s Euro Stoxx 50 advancing +0.32%, and Japan’s Nikkei 225 gaining +1.03%.