Global Stocks Rally Amid Mixed Dollar Performance and Strong U.S. Manufacturing Data

Global stocks rebounded on Friday, though they remained on course for a weekly decline. The U.S. dollar, which had been on a strong rally, stalled after recent gains but found some support from a stronger-than-expected U.S. manufacturing survey.

U.S. Stocks Recover with Strong Gains

U.S. equities bounced back strongly, with both the S&P 500 and Nasdaq rising more than 1%, breaking a five-session streak of declines—the longest since mid-April. Every sector of the S&P 500 advanced, led by a notable 2.42% jump in consumer discretionary stocks.

The Dow Jones Industrial Average rose by 339.86 points, or 0.80%, closing at 42,732.13. The S&P 500 climbed 73.92 points, or 1.26%, to finish at 5,942.47, while the Nasdaq Composite surged 340.88 points, or 1.77%, to end at 19,621.68.

Despite the positive daily performance, the weekly results were mixed. The S&P 500 ended the week down 0.48%, the Nasdaq fell by 0.51%, and the Dow dropped 0.6%.

Global Market Trends

Globally, stocks saw a boost, with MSCI’s gauge of global stocks advancing by 0.90%, closing at 847.45. However, it remained on track for its third weekly decline in the last four weeks. In Europe, equities closed lower, with the pan-European STOXX 600 index down 0.49%, weighed down by losses in luxury and alcohol sectors. Despite this, European markets recorded their second consecutive weekly gain.

Trading volumes were light due to the holiday-shortened week.

Dollar Stalls Despite Manufacturing Data

The dollar index, which measures the greenback against a basket of currencies, fell by 0.29%, closing at 108.90. The decline came after the Institute for Supply Management (ISM) reported that the U.S. manufacturing index increased to 49.3 last month, surpassing expectations and reaching the highest level since March. Despite the decline on Friday, the dollar was on track for its fifth consecutive week of gains and had reached a two-year high of 109.54 earlier in the week.

The euro gained 0.43% to $1.0309, but it remained on course for its fifth straight weekly loss. The yen weakened by 0.15% to 157.29 against the dollar, while the British pound strengthened by 0.36%, reaching $1.2424.

U.S. Treasury Yields Hold Firm

The yield on benchmark U.S. 10-year Treasury notes rose 2.7 basis points to 4.602%, following the stronger manufacturing data. Although it had retreated from the earlier eight-month high of 4.641%, it remained above the 4.5% threshold that has been challenging for equities.

Richmond Federal Reserve President Tom Barkin indicated that the central bank’s policy rate should remain restrictive until inflation shows clear signs of returning to the Fed’s 2% target.

Oil Prices Rise Amid Cold Weather and Stimulus Measures

U.S. crude oil prices jumped by 1.13%, settling at $73.96 per barrel, while Brent crude rose 0.76%, closing at $76.51 per barrel. The gains were supported by colder weather in both Europe and the U.S. and additional economic stimulus measures announced by China.

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