On Friday, U.S. stock performance diverged, featuring a notable rally within the tech sector largely driven by Broadcom’s impressive earnings report. The semiconductor company saw its stock soar by 24%, significantly boosting the Nasdaq index. This positive momentum in tech also benefited consumer discretionary stocks like Tesla, which posted gains after a price increase for its Model S vehicles. In contrast, other sectors such as Communication Services, Materials, and Energy struggled, with stocks like Meta and Google contributing to the downward pressure on those indices. The overall market closed mixed, with the S&P 500 dropping by 1.4%, the Nasdaq down 2.4%, while the DJIA and Russell 2000 also faced declines of 1.2% and 3.0%, respectively.
Looking internationally, significant developments emerged from China and South Korea. A People’s Bank of China official stated that there is potential for further cuts to the reserve requirement ratio (RRR), indicating a readiness to support the economy amid sluggish growth. In South Korea, lawmakers made headlines by successfully impeaching President Yoon for the second time, following significant backlash against his short-lived martial law. Until a new president is elected, Prime Minister Han will serve as acting president and has vowed to maintain governmental stability and national security.
In the backdrop of these political developments, Moody’s took an unscheduled action by downgrading France’s credit rating from “Aa2” to “Aa3”, highlighting political fragmentation as a considerable risk to the country’s fiscal stability moving forward. The agency underscored concerns that this fragmentation would hinder meaningful fiscal policy reforms, diminishing the probability of sustainable reductions in fiscal deficits. Moody’s maintained that France’s local and foreign currency ceilings remain at the highest level of AAA.
Economic data released on Friday offers insight into state-level trading conditions, particularly regarding U.S. import prices and Canadian manufacturing sales. While U.S. import prices rose slightly by 0.1% in November, Canadian manufacturing saw a robust recovery, with sales increasing by 2.1% during October, surpassing expectations. On the commodities front, several incidents, including strikes and oil spills, suggested challenges for the energy industry. Union workers at Marathon’s Detroit refinery ratified a pay agreement after a lengthy strike, indicating a movement toward industrial stability.
Geopolitical tensions continue to shape market responses, especially regarding U.S.-China relations. Treasury Secretary Janet Yellen highlighted the potential for sanctions against Chinese banks that support Russia in its ongoing conflict with Ukraine. Additionally, the U.S. administration is strategizing new rules to restrict advanced AI technology sales to China. On the domestic front, discussions surrounding the future of the semiconductor market intensified, with initiatives aimed at regulating sales aimed at reducing China’s access to critical technologies.
Finally, noteworthy developments in the Asia-Pacific region included an optimistic outlook from a Chinese official regarding economic growth, projecting GDP growth around 5% for the year. These assertions follow ongoing concerns over global economic conditions and trade tensions. Meanwhile, South Korea’s political scene remains turbulent, with acting president Han pledging to ensure governmental continuity and navigate economic challenges effectively. As market participants keep a close eye on these unfolding events, economic data releases in the forthcoming week, including revisions to trade balances and machinery orders, are expected to further inform investment strategies.
