US stocks are climbing this afternoon to recover some of their losses from what has been one of the toughest weeks in the market this year.
The S&P 500 advanced by 1.7% and was set for its strongest day in six weeks after overcoming an initial decline. Similarly, the Dow Jones Industrial Average increased by 1.7%, while the Nasdaq Composite rose by 1.8%.
Eli Lilly was a major contributor to the market uplift after its competitor, Novo Nordisk, provided an update on a potential weight-loss treatment that analysts deemed disappointing. This development could benefit Eli Lilly, whose drug Zepbound is used to treat obesity, resulting in a 5.1% rise in its stock.
However, the most significant gain came from leading tech stock Nvidia, which surged alongside the broader market following a report indicating that a key inflation measure favored by the Federal Reserve was slightly lower last month than economists had predicted. This positive data offers hope after recent reports suggested that reducing inflation to the Fed’s 2% target from its peak above 9% might be challenging.
The possibility of persistent higher inflation was one of the factors Fed Chair Jerome Powell cited this week when the central bank suggested it might implement fewer interest rate cuts next year than previously anticipated.
“When optimism is rising and market multiples are expanding, it just takes a little fear to take the veneer off a market rally,” commented Brian Jacobsen, chief economist at Annex Wealth Management.
Friday’s better-than-expected inflation figures led traders to reduce their expectations for zero interest rate cuts in 2025, now collectively assigning only a 15% probability to such an outcome.
