Tech Stocks Ignite Broad Market Rally, Sentiment Turns Constructive

Friday’s trading session showcased strong momentum across equities as technology and semiconductor stocks led a vigorous advance. Market sentiment turned decisively positive, with the S&P 500 gaining +0.88% and the Nasdaq 100 surging +1.28%, while the Dow Jones closed up +0.38%. Futures contracts reflected similar strength, with March E-mini S&P futures rising +0.87% and March E-mini Nasdaq futures climbing +1.28%.

Cloud infrastructure stocks emerged as the session’s standout performers, recovering sharply from recent selling pressure amid financing concerns. CoreWeave surged +23%, while Applied Digital rallied +16% and Nebius Group NV jumped over +15%. This rebound proved instrumental in lifting broader market sentiment, as institutional investors reassessed valuations in this high-growth sector.

Oracle’s performance exemplified the day’s positive undertone, with shares advancing more than +7% following TikTok CEO Chew’s announcement of binding agreements to establish a US joint venture. Semiconductor manufacturers maintained the rally’s momentum throughout the session. Micron Technology led Nasdaq 100 gainers with a +7% close, while Advanced Micro Devices finished up more than +6%. Other chip-related names including Lam Research (+4%), Nvidia (+3%), Broadcom (+3%), and ASML Holding also posted significant gains, underscoring strong demand sentiment in the semiconductor supply chain.

Cryptocurrency Exposure Drives Secondary Rally

Bitcoin demonstrated resilience with a +1.29% advance to $89.03K, driving enthusiasm among digital asset-focused equities. Riot Platforms surged over +8%, Galaxy Digital Holdings climbed more than +6%, and Mara Holdings rose over +4%. Coinbase Global, the major cryptocurrency exchange platform, advanced more than +2%, reflecting improved risk appetite across alternative assets.

Economic Cross-Currents Shape Trading Dynamics

Friday’s economic data painted a mixed picture for investor sentiment. US existing home sales for November increased +0.5% month-over-month to reach a 9-month high of 4.13 million units, though falling slightly short of the 4.15 million consensus forecast. However, the University of Michigan’s December consumer sentiment index delivered an unexpected downward revision of -0.4 points to 52.9, undershooting expectations for an upward move to 53.5.

Inflation expectations showed an upside surprise, with the 1-year inflation gauge revised upward to 4.2% from the previously reported 4.1%. These divergent signals created uncertainty about the sustainability of the market rally.

New York Fed President John Williams offered comments that supported equities but pressured fixed income. He characterized recent economic data as “pretty encouraging” and noted no evidence of sharp deterioration in employment conditions. Williams guided for 2025 US GDP growth between 1.5% to 1.75%, with acceleration anticipated in 2026. Critically, he signaled a patient monetary policy stance, stating “there’s no urgency to need to act further on monetary policy right now, because I think the cuts we’ve made have positioned us really well.”

Triple Witching Adds Volatility to Session

Friday’s options, futures, and derivatives expiration—known as triple witching—introduced elevated market volatility. According to Citigroup analysis, a record $7.1 trillion in notional open interest rolled off US options markets, potentially exaggerating normal price movements. The Federal Reserve futures market is currently pricing a 22% probability of a 25 basis point rate cut at the January 27-28 FOMC meeting.

Global Equities Participate in Sentiment Improvement

International markets followed the constructive sentiment, with Europe’s Euro Stoxx 50 finishing +0.32% higher. China’s Shanghai Composite climbed to a 1-week peak and closed up +0.36%, while Japan’s Nikkei Stock 225 advanced +1.03%.

Bond Markets Face Headwinds from Shifting Sentiment

Treasury note prices declined as equity strength reduced safe-haven demand. The 10-year T-note yield advanced +2.7 basis points to 4.149%, with March 10-year T-note futures closing down -8 ticks. Williams’ hawkish commentary reinforced downward pressure on bond values. Additionally, the steepening yield curve—triggered by the Fed’s recent announcement to purchase up to $40 billion monthly in short-term T-bills—continues to weigh on longer-dated securities.

European government bond yields posted notable gains, with Germany’s 10-year bund yield reaching a 9-month peak of 2.899% before settling +4.6 basis points higher at 2.895%. The UK 10-year gilt yield climbed +4.3 basis points to 4.524%. Japan’s 10-year government bond yield surged to a 26-year high of 2.025% following the Bank of Japan’s interest rate increase and forward guidance on additional tightening.

German economic data underwhelmed market sentiment. Producer price inflation fell -2.3% year-over-year in November, steeper than the -2.2% expectation and marking the sharpest 20-month decline. The GfK consumer confidence index unexpectedly retreated -3.5 points to a 1.75-year trough of -26.9, versus forecasts for a move to -23.0. UK retail sales excluding auto fuel surprisingly contracted -0.2% month-over-month, missing expectations for a +0.1% gain. ECB rate cut probabilities remain anchored near zero for the February 5 policy meeting.

Notable Individual Stock Movements

Cruise operators delivered outsized returns as consumer discretionary sentiment brightened. Carnival Corporation led sector gainers with a +9% advance after reporting Q2 adjusted EPS of $0.34, surpassing consensus of $0.24. Norwegian Cruise Line Holdings climbed over +6%, and Royal Caribbean Cruises advanced more than +2%.

Several stocks received positive catalyst from analyst upgrades. FactSet Research Systems finished up more than +5% following Huber Research Partners’ double-upgrade to overweight. Amphenol gained more than +4% after Truist Securities raised its price target to $180 from $147. Cummins Inc (+1%) and Generac Holdings (+1%) also benefited from bullish rating changes.

Conversely, negative earnings guidance dominated weakness in select sectors. Lamb Weston Holdings led S&P 500 decliners with a -25% plunge following downward full-year sales guidance of $6.35-$6.55 billion, below consensus of $6.52 billion. Nike fell more than -10% to lead Dow losers after guiding for Q3 revenue down in the low single digits with gross margins compressing 175-225 basis points, citing persistent China softness. KB Home declined more than -8% to lead homebuilders lower after reporting Q4 EPS of $1.55, missing consensus of $1.79, and issuing cautious 2026 guidance. Conagra Brands fell more than -2% following a report of organic sales declining -3% in Q2, worse than the -2.42% forecast.

Seasonal Tailwinds Support Year-End Positioning

Market participants cited strong seasonal patterns as supporting the constructive sentiment. Citadel Securities data indicates that since 1928, the S&P 500 has risen 75% of the time during December’s final two weeks, averaging a +1.3% gain during this window. This historical seasonality may be emboldening investors to maintain or add long exposure despite economic cross-currents.