S&P 500 and Nasdaq End the Day with Strong Gains on Govt Shutdown Resolution
Today European stocks ended down, while US indices such as S&P 500 and Nasdaq reversed higher as risk sentiment improved after soft US CPI inflation data.
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The year’s final trading day unfolded under a cloud of uncertainty, with concerns over a looming U.S. government shutdown. Tensions rose as the clock ticked toward midnight, following the failure of Trump’s spending measure to pass a House vote. The apprehension weighed heavily on markets, with European stocks sliding in response to the negative sentiment despite a late-session rally attempt.
Risk assets struggled early, still reeling from the previous day’s late selloff on Wall Street. While U.S. stocks managed to stage respectable gains later in the day, European indices closed lower. However, a better-than-expected PCE inflation report and dip-buying ahead of a potential U.S. government resolution sparked a dramatic turnaround. What initially seemed like a grim day for European markets ended with signs of recovery but still down for the day and for the week.
Daily Closing Changes for Main European Indices:
- Stoxx 600: Declined by 0.8%, reflecting broad weakness across European markets.
- German DAX: Edged down by 0.3%, indicating slight pressure on German equities.
- France CAC: Decreased by 0.1%, showcasing relative stability compared to peers.
- UK FTSE 100: Fell by 0.2%, with losses distributed across sectors.
- Spain IBEX: Gained 0.4%, bucking the regional trend with modest positive performance.
- Italy’s FTSE MIB: Dropped by 0.1%, closing near flat with minor losses.
Weekly Closing Changes for Main European Indices:
- Stoxx 600: Suffered a 2.7% weekly drop, highlighting a challenging period for European equities.
- German DAX: Lost 2.4% over the week, weighed down by global risk aversion.
- France CAC: Declined by 1.7%, outperforming most regional peers on a relative basis.
- UK FTSE 100: Slipped 2.4% weekly, as concerns about economic headwinds persisted.
- Spain IBEX: Decreased by 2.4% for the week, giving back some gains from earlier sessions.
- Italy’s FTSE MIB: Posted the steepest weekly decline of 3.25%, under pressure from sector-specific weaknesses and broader sentiment challenges.
The PCE report, regarded as the Federal Reserve’s preferred measure of inflation, was released early in the U.S. session. The data showed inflation cooling more than expected, leading to a decline in the U.S. dollar, which ended the day roughly one cent weaker. This eased financial market tensions and bolstered sentiment across risk assets, including commodity-linked currencies and stock markets.
The S&P 500 index initially slipped below the moving averages on smaller timeframe charts, tilting the bias to the downside early in the session. However, the index rebounded sharply, closing the day above the 5,900-point mark. Notably, the week’s low briefly dipped below a swing range near 5,860, offering sellers an opportunity to push prices lower, but they failed to capitalize. Looking ahead to next week, the moving averages will act as a key resistance level for upward momentum. On the downside, the swing range near recent lows is expected to provide strong support.
Closing Prices for Main US Indices
Daily Performance (Friday):
- Dow Jones Industrial Average:
- Gained 498.82 points (+1.18%) to close at 42,841.06.
- S&P 500 Index:
- Rose 63.79 points (+1.09%) to close at 5,930.87.
- NASDAQ Composite:
- Added 199.83 points (+1.03%) to close at 19,572.60.
- Russell 2000 (Small-Cap Index):
- Increased by 20.86 points (+0.94%) to close at 2,242.36.
Weekly Performance:
- Dow Jones Industrial Average:
- Declined by -2.25%.
- S&P 500 Index:
- Dropped by -1.90%.
- NASDAQ Composite:
- Fell by -1.78%.
- Russell 2000 Index:
- Underperformed with a -4.45% decline.
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