The major index futures indicate a higher opening on Monday, suggesting that stocks are set to build on the gains achieved in the previous week. The upward momentum is observed alongside an advance by shares of Nvidia, as the AI darling and market leader experiences a 2.2 percent increase in pre-market trading. Nvidia is advancing following the announcement from software giant Microsoft that it has obtained export licenses from the Trump administration to ship Nvidia chips to the United Arab Emirates. Overall trading activity may exhibit a degree of restraint, as market participants anticipate the forthcoming release of payroll processor ADP’s report on private sector employment scheduled for Wednesday. The current government shutdown is causing an indefinite postponement of several crucial U.S. economic reports. In this context, the ADP report may provide insights into the robustness of the labor market, particularly as uncertainty looms over the future trajectory of interest rates.
Following a robust upward movement at the beginning of the session, equities experienced significant volatility throughout the trading day on Friday. The major averages retraced from their early peaks during mid-day trading, subsequently rebounding before once more relinquishing gains as the session drew to a close. Notwithstanding the late-day pullback, the major averages concluded the day in positive territory. The Nasdaq increased by 143.81 points, reflecting a rise of 0.6 percent, reaching a level of 23,724.96. The S&P 500 saw an uptick of 17.86 points, corresponding to a 0.3 percent gain, settling at 6,840.20. Meanwhile, the Dow experienced a modest increase of 40.75 points, or 0.1 percent, concluding at 47,562.87. During the week, the Nasdaq, characterized by its concentration in technology stocks, experienced a notable increase of 2.2 percent. In contrast, the Dow and the S&P 500 recorded more modest gains of 0.8 percent and 0.7 percent, respectively.
The early strength largely reflected a positive reaction to earnings news from Amazon, with the online retail giant soaring by 9.6 percent on the day. Amazon achieved a new record closing high following the announcement of third quarter results that surpassed expectations, driven by a significant rise in cloud computing revenue. “The e-commerce division may have by far the bigger public profile, but it is the cloud services AWS division that serves as the true engine of Amazon’s growth, and it is this aspect that has invigorated the share price,” stated Russ Mould. He noted, “Demand for computing power linked to AI is showing no signs of letting up and that is driving significant growth for AWS, with third-quarter numbers helping to ease fears that this business was losing ground to rival operators.” Netflix also turned in a strong performance on the day after the streaming giant announced its board of directors has approved a ten-for-one stock split.
Conversely, iPhone manufacturer Apple experienced a decline, despite reporting fiscal fourth quarter results that surpassed analyst expectations and offering optimistic guidance for the current quarter. The volatility was further exacerbated by uncertainty surrounding the outlook for interest rates, a sentiment echoed in Federal Reserve Chairman Jerome Powell’s remarks earlier in the week. On Wednesday, the Fed implemented a widely anticipated quarter-point reduction in interest rates; however, Powell’s comments following the meeting tempered the prevailing optimism regarding a potential rate cut in December. Powell indicated that a subsequent decrease in rates in December is “not a foregone conclusion,” highlighting that Fed officials held “strongly differing views about how to proceed” during the last meeting of the year. Retail stocks exhibited robust performance in light of Amazon’s surge, as the Dow Jones U.S. Retail Index experienced a notable increase of 4.0 percent, reaching its highest closing level in more than a month. Notable strength was evident in airline stocks, as indicated by the 2.7 percent increase in the NYSE Arca Airline Index. The index rebounded from its lowest closing level observed in more than two months. Biotechnology, computer hardware, and brokerage stocks exhibited significant strength during the day, whereas gold stocks experienced a marked decline in response to a drop in the price of the precious metal.