The US stock market clocked stellar gains on Friday, with the S&P 500 rising 2%, the Nasdaq jumping 2.25% and the Dow Jones Industrial Average hitting the 50,000 mark for the first time, reaching 50,141.06 with a jump of 2.52%.
US stocks witnessed their best day since May last year, staging a sharp rebound after a rout in tech stocks on concerns over high costs in artificial-intelligence developments.
The panic-driven selling of earlier last week was triggered by a new automation tool from Anthropic PBC, which brought back the memories of DeepSeek’s AI model at the start of 2025. They started in technology stocks and spread to several sectors, including financial services and others.
What drove the US stock market higher on Friday?
The market witnessed strong short covering due to a confluence of factors. The biggest one was the hope that the US Federal Reserve would cut interest rates in the near future amid expectations that inflation had cooled significantly.
“Market sentiment improved after a positive report out of the University of Michigan. Median one-year inflation expectations fell to 3.5%, the lowest since January 2025, providing some comfort for investors eager to see improving inflation metrics,” Jeffrey Roach, Chief Economist for LPL Financial, noted.
“We think the markets may have to work through more jitters with a new Fed chair, but in the end, we think the Fed will cut rates later this year, which will grease the skids for more market appreciation,” Roach said.
Improving consumer confidence is also boosting market sentiment. As Roach highlighted, February consumer sentiment improved for the third consecutive month, as incomes are expected to at least keep up with prices.
“A main reason for the improved opinion on household finances is higher assets, a category sensitive to market performance. Consumers have moved on from tariff preoccupations. Higher assets improved the outlook for household finances, i.e., the K-shaped economy continues. More consumers say it’s a good time to buy a vehicle and major household items. Therefore, we expect real growth to approach 2.7% this quarter as conditions remain fertile,” said Roach.
Improving macro outlook and rate cut expectations are underpinning market sentiment, making investors buy the dips aggressively.
Another key factor is the easing of geopolitical tensions. According to Reuters, “Iran’s top diplomat termed nuclear talks with the U.S. as a ‘good start’ and expressed optimism that the talks will continue.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
