NEW YORK (AP) — U.S. stocks are rising Friday to trim their losses in what’s set to be one of their worst weeks of the year.
The S&P 500 climbed 0.7% in morning trading after erasing an initial drop. The Dow Jones Industrial Average was up 311 points, or 0.7%, as of 10:40 a.m. Eastern time, while the Nasdaq composite gained 0.7%.
Eli Lilly was one of the strongest forces lifting the market after Danish rival Novo Nordisk gave an update on a potential weight-loss treatment that analysts said fell short of expectations. That could help Eli Lilly, whose Zepbound helps treat obesity, and its stock climbed 4.3%.
Cruise lines also rallied after Carnival steamed past analysts’ expectations for profit in the latest quarter. CEO Josh Weinstein said it’s seeing strong demand and expects growth to continue into 2025 thanks in part to higher fares. Carnival climbed 3%, and rival Norwegian Cruise Line rose even more, 3.4%.
Stocks broadly got a lift from a report in the morning showing a measure of inflation that the Federal Reserve likes to use was slightly lower than economists expected for last month. It’s a bit of encouragement following recent reports showing inflation may be tough to get all the way down to the Fed’s 2% goal.
The threat of higher inflation was one of the reasons Fed Chair Jerome Powell cited this week when the central bank hinted it may deliver fewer cuts to interest rates next year than earlier expected.
That warning sent a shock through the stock market, which had run to all-time highs in recent weeks on the widespread expectation for a string of cuts to rates next year. Now traders are largely betting on one, two or perhaps even zero in 2025, according to data from CME Group.
“When optimism is rising and market multiples are expanding, it just takes a little fear to take the veneer off a market rally,” according to Brian Jacobsen, chief economist at Annex Wealth Management.
Critics had been warning stock prices were vulnerable to drops after running so high, and they likely needed everything to go correctly to justify their stellar gains for the year so far. Besides the dashed hopes for several rate cuts next year, Wall Street got another reminder late Thursday that everything may not go as expected.
The House of Representatives resoundingly rejected President-elect Donald Trump’s plan to keep the U.S. government fully running ahead of a potential shutdown. It’s unclear what the next steps will be, but the failure indicates Washington may not run smoothly even with Republicans in charge of the House, Senate and White House.
