(Updates to midafternoon US time, adds market details)
Nike slides as Q2 gross margins drop
Micron Technology continues rally
Stocks volatile on triple witching day
Indexes up: S&P 0.89%, Nasdaq 1.17%, Dow 0.57%
By Abigail Summerville and Sruthi Shankar
Dec 19 (Reuters) – U.S. stocks climbed on Friday, as a rebound in technology shares heading into the final weeks of the year offset tumbling consumer stocks such as Nike. Megacaps extended gains from Thursday, when chipmaker Micron Technology’s strong forecasts re-ignited optimism around AI-related shares, which had recently come under pressure over lofty valuations and funding concerns. Micron shares reached a record high on Friday, up 7.4%. Nvidia also rose 3.3% as the U.S. launched a review that of Nvidia’s second-most powerful AI chip. Those moves lifted the Philadelphia SE Semiconductor index 3.1%. Meanwhile, Oracle jumped 7.6% after TikTok’s Chinese owner, ByteDance, signed binding agreements to hand control of the short-form video app’s U.S. operations to a group of investors, including the cloud computing giant.
“Tech in general, particularly the AI-related companies, came under a fair amount of pressure and when Micron reported (on Wednesday) and the market reacted the way that it did, there’s the idea that maybe people can come back to these ,” said Thomas Martin, senior portfolio manager at Globalt Investments. December has also traditionally been a strong period for stock markets. Since 1950, the so-called Santa Claus rally has been reflected by the S&P 500 rising by an average of 1.3% over the last five trading days of the year and the first two trading days in January, according to the Stock Trader’s Almanac.
At 2:05 p.m. EST, the Dow Jones Industrial Average rose 273.15 points, or 0.57%, to 48,226.53, the S&P 500 gained 60.21 points, or 0.89%, to 6,835.14 and the Nasdaq Composite gained 267.76 points, or 1.17%, to 23,274.60.
Nine of the 11 S&P sectors gained on Friday, but utilities and consumer staples stocks slipped 0.53% and 0.21%, respectively. Nike shares slumped 10.9% after the sportswear giant reported a drop in gross margins for the second consecutive quarter, hurt by poor sales in China and efforts to reset its product mix. Lamb Weston fell 24% after the supplier of frozen French fries signaled muted demand for its products for the rest of the fiscal year. Conagra fell 1.9% after the Slim Jim meat snacks maker reported weak earnings. Investors drew comfort from U.S. consumer prices rising less than expected in November, but some analysts flagged that the print could be distorted due to the 43-day government shutdown that prevented the collection of October data.
Traders continued to bet on at least two 25-basis-point interest rate cuts next year from the Federal Reserve, according to LSEG data, while assigning a 20% chance to the first reduction as early as January.
Analysts warned of higher volatility on Friday due to “triple witching,” which is the quarterly, simultaneous expiration of stock options, stock index futures and stock index options contracts.
Advancing issues outnumbered decliners by a 1.55-to-1 ratio on the NYSE, and by a 1.56-to-1 ratio on the Nasdaq.
The S&P 500 posted 16 new 52-week highs and two new lows while the Nasdaq Composite recorded 73 new highs and 126 new lows.
(Reporting by Abigail Summerville in New York and Sruthi Shankar and Shashwat Chauhan in Bengaluru; Editing by Matthew Lewis)
