Stocks Climb Led by Small Caps, Bitcoin Soars: Markets Wrap

(Bloomberg) — It’s shaping up to be a good week for blue-chip and small-cap stocks which led Friday’s advance as this year’s big tech winners struggled to gain ground. 
Other beneficiaries of the incoming administration’s looser regulation and business-friendly stance put forth strong showings. The dollar rose, on course for an eighth straight week of gains, the currency’s longest run of the year, while Bitcoin set an all-time high in its race toward the $100,000 mark.
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The S&P 500 edged up 0.3% while an equal-weighted version of the gauge — where Walgreens Boots Alliance Inc. has the same influence as Nvidia Corp. — climbed 0.8%, on track for an all-time closing high. The blue-chip Dow Jones Industrial Average rose 0.8% while an index of bank stocks climbed to the highest in more than two years, the Russell 2000 jumped 1.9%. The biggest technology stocks, like Nvidia, Alphabet Inc. and Facebook-parent company Meta Platforms Inc., lagged.
Fundstrat’s Thomas Lee sees room for more gains in small-caps and cyclicals given the incoming administration’s plans for deregulation and general “animal spirits.” And the rally in the broader market may still have some gas left.
“When sentiment reaches a ‘bullish extreme’ is when we see equities priced to ‘perfection,’” according to Lee. “By several measures, we are not there at that point yet.”
To Bank of America Corp. strategists the Nasdaq 100, which has rallied more than 4% this month, is approaching a level versus the S&P 500 that could trigger the unwinding of the trade favoring US equities. The tech-heavy gauge drifted in Friday trading, while still on track for a 1.6% weekly gain.
Meanwhile, data on Friday showed S&P Global flash November composite output index for service providers and manufacturers advanced to 55.3 — the highest level since April 2022. The yield on the 10-year Treasury dropped around one basis point to 4.41%.
“The US flash PMIs for November were bullish in aggregate thanks to strength in services,” according to Vital Knowledge’s Adam Crisafulli, who said the details suggested a goldilocks scenario, “with favorable growth developments and cooling price pressures.”
The dollar was on track for its longest streak of weekly wins since September 2023. A Bloomberg gauge of the currency’s strength has risen around 2.5% so far this month, adding to October’s gains of nearly 3%.
“The US dollar’s run can continue,” said Peter McLean, head of multi-asset portfolio solutions at Stonehage Fleming. “We also have those geopolitical tensions, which are escalating at the moment. It’s natural for investors to seek refuge in the dollar.”
Bouts of volatility, driven by escalations in the war in Ukraine earlier in the week, eased Friday. The ongoing conflict pushed WTI crude above $71 a barrel while gold traded at over $2,700 an ounce, heading toward its biggest weekly gain since March 2023. 
The rally in Bitcoin set a fresh high on bets that Trump’s support for crypto and a looser regulatory environment will help the industry. The world’s biggest cryptocurrency is fast approaching $100,000.
The latest developments included Securities and Exchange Commission Chair Gary Gensler’s decision to step down in January. His tenure was marked by a flurry of crypto enforcement actions, which the industry expects will peter out under Trump. 
S&P Global’s composite Purchasing Managers’ Index for the euro area dipped back beneath the level that separates growth from contraction in November. The region’s sovereign bonds rallied while the euro dropped to a two-year low.
Asian equities are on pace for their first back-to-back monthly losses this year amid dollar strength and lingering concerns over the Chinese economy. Still, the region’s more favorable valuations versus the US market are aiding recovery in some assets.
Elsewhere in Asia, Adani Group companies advanced after a $27 billion rout on Thursday following a US indictment against Gautam Adani over allegations of bribery. The company denied the allegations.
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This story was produced with the assistance of Bloomberg Automation.
–With assistance from Margaryta Kirakosian, Andre Janse van Vuuren and Sujata Rao.
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