Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed Friday’s trading session on higher ground, led by a strong performance in the tech sector.
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Nvidia (NVDA), which is the largest component in both ETFs, finished the day with a 3.87% gain after Reuters reported that the Trump administration will initiate the process of reviewing the company’s H200 chips to determine if they are eligible for shipment to China. President Trump previously approved shipments of the chips to China on the condition that the U.S. receive a 25% share of the revenue. Nvidia received another boost after Truist Securities raised its price target to $275 from $255.
More upside could be on the way as the S&P 500 (SPX) approaches a positive stretch of seasonality called the “Santa Rally.” According to Citadel Securities, the benchmark index rises 75% of the time with an average return of 1.3% during the last two weeks of the year. “Barring any major shocks, it will be hard to fight the overwhelmingly positive seasonal period we are entering and the cleaner positioning set-up,” wrote Goldman Sachs’ trading desk team in a note to clients.
Meanwhile, the University of Michigan’s Consumer Sentiment Index rose to 52.9 in December from 51.0 in November, although the reading still fell below the consensus estimate of 53.5.
“Despite some signs of improvement to close out the year, sentiment remains nearly 30% below December 2024, as pocketbook issues continue to dominate consumer views of the economy,” said Surveys of Consumers Director Joanne Hsu. In addition, consumer expectations of inflation over the next year fell for a fourth consecutive month to 4.2%, which also marks an 11-month low. Long-run inflation expectations dropped to 3.2% from 3.4%.
In other news, the unemployment rate rose to a four-year high of 4.6% in November, although Trump claimed the rise was due to a deliberate government workforce reduction. “I could reduce Unemployment to 2% overnight by just hiring people into the Federal Government, even though those Jobs are not necessary,” Trump said in a Truth Social post on Friday. The U.S. has shed 271,000 government jobs year-to-date, with the Office of Personnel Management estimating 317,000 total losses by the end of the year.
Finally, Trump announced lower drug prices in collaboration with nine major pharmaceutical companies, including Amgen (AMGN), Bristol-Myers Squibb (BMY), and GSK (GSK). The companies agreed to lower prices in line with most-favored-nation (MFN) prices, which tie U.S. drug costs to the lowest prices paid in other developed nations. In addition, they agreed to invest $150 billion in the U.S. and will be exempt from Trump’s tariffs over the next three years.
The S&P 500 (SPX) closed with a 0.07% gain, while the Nasdaq 100 (NDX) returned 0.32%.
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