Global Stocks and Dollar Keep Markets on Edge

Global stocks showed signs of recovery yet remained on course for a weekly dip. The U.S. dollar briefly stalled but gained support from robust manufacturing data. Meanwhile, the S&P 500 and Nasdaq snapped a five-session losing streak, with all major sectors led by consumer discretionary stocks.

Global stocks experienced a rally on Friday, although they remain poised for a weekly drop, while the dollar halted its recent climb but drew some backing from unexpectedly strong U.S. manufacturing data.

The U.S. markets saw substantial gains, with both the S&P 500 and Nasdaq climbing over 1%, breaking a five-session losing streak—their longest since April. Every major sector in the S&P rose, led by consumer discretionary stocks. The late-2022 surge in the U.S. currency was largely attributed to investor confidence in then-President-elect Donald Trump's growth-driven policies, foreseeing fewer interest rate cuts by the Federal Reserve coupled with rising U.S. Treasury yields, contrasting with expected rate cuts from European central banks.

According to the Fed's December policy statement, investor expectations for rate cuts in 2025 saw a decline. Bill Northey, senior investment director at U.S. Bank Wealth Management, noted a focus on growth and inflation as key market drivers, favoring equities over fixed income in the current environment. The evolving U.S. legislative and administrative landscape remains a critical factor. Meanwhile, the dollar index revealed mixed results but was on track for significant weekly gains, underscoring its dominant position in the currency market.

(With inputs from agencies.)