Stocks closed higher Friday as Wall Street recovered following a shaky start to the new year.

The S&P 500 closed up 73.92 points, or 1.26%, at 5,942.47, and the Dow Jones Industrial Average advanced 339.86 points, or 0.8%, to end the day at 42,732.13. The Nasdaq Composite gained 340.88 points, or 1.77%, to close at 19,621.68.

Tech stocks were a bright spot for the market on Friday. Chip giant Nvidia climbed 4.7%, while server maker Super Micro Computer jumped 10.9%.

Those stocks could benefit from continued spending on artificial intelligence, as will Constellation Energy and Vistra, with shares up 4% and 8.5%, respectively. Microsoft announced Friday that it would spend $80 billion on AI-enabled data centers in fiscal 2025, and power producers have been boosted by the trend.

The rally on Friday was broad, though some of the best performers were also big winners during last year's rally.

"The secular growth drivers that have been driving earnings growth and market gains over the last two years, I think they're still on strong footing and will continue to drive those earnings gains," Jeremiah Buckley, portfolio manager at Janus Henderson Investors, said on CNBC's "Squawk on the Street."

Friday's rally snapped a five-day losing streak for the Nasdaq and the S&P 500, but it was not enough to make the major averages winners on the week. The S&P 500 finished the week down 0.48%, while the Dow lost 0.60%. The Nasdaq Composite lost 0.51%.

That weakness for stocks also means the "Santa Claus" rally, in which stocks gain in the final five trading days of one year and the first two of the next, failed to materialize. The market cooled in the final weeks of 2024, but the averages are still not too far from record highs after a strong year for Wall Street.

"Generally, these are the days that you kind of have people just moving to the sidelines after what's been a pretty tough last four weeks. And the fact that today you're not seeing that means that perhaps this is an orderly type of consolidation, not a beginning of some sort of incredibly painful period," Mark Hackett, chief market strategist at Nationwide Financial, told CNBC.

News out of Washington, D.C., was spurring some individual stock moves on Friday. Shares of U.S. Steel fell 6.5% after President Joe Biden said he would block the proposed acquisition by Nippon Steel. Booze and beer stocks declined after the U.S. surgeon general issued an advisory on cancer risk related to alcohol consumption, with Molson Coors falling 3.4%.

Stocks close higher, but still finish down for holiday-shortened week

The stock market enjoyed a broad rally on Friday, led by the tech-heavy Nasdaq Composite. Still, the three major averages finished with losses for the week.

— Jesse Pound

More companies than average in S&P 500 are giving negative Q4 EPS guidance, FactSet says

A disproportionately large share of companies are saying don't count on fourth-quarter profits to bail the stock market out of its recent funk.

More than one-fifth of companies, or 106, in the S&P 500 have so far issued some type of fourth-quarter earnings guidance and of those, 67% have been negative, above both the five-year average of 57% and the 10-year average of 62%, according to FactSet senior earnings analyst John Butters. Conversely, the percentage of companies issuing positive guidance is below the five- and 10-year norm.

Information technology, industrials and consumer discretionary companies are issuing the greatest number of down forecasts, FactSet said.

"Guidance" or "preannouncing" comes when a company releases an earnings outlook in advance of formal results, and negative guidance is defined by FactSet as occurring when a company's estimate, or the midpoint of an estimate range, is lower than the mean earnings per share estimate by analysts the day before the guidance.

— Scott Schnipper

S&P 500 will rise more than 12% in 2025, UBS says

The market may have more room to run in 2025, according to UBS' David Lefkowitz.

"We expect the bull market to continue with the S&P 500 reaching 6,600 by the end of the year, primarily driven by healthy profit growth of 9%," the firm's chief investment officer of U.S. equities wrote in a recent note. His price target implies about 12.5% upside from Thursday's close.

"That said, there are always risks that investors will have to navigate," Lefkowitz continued.

On that front, Lefkowitz said changes in trade policy under President-elect Trump, fiscal battles in Congress, inflation and the outlook for artificial intelligence could all possibly spur volatility in the coming year.

"But as long as corporate America puts up the numbers, stocks should respond favorably," he said.

The forecast comes after a record-breaking year for the S&P 500. In 2024, the broad market index gained more than 23%, scoring multiple new intraday and closing highs during the period.

— Sean Conlon

Microsoft expects to spend $80 billion on AI-enabled data centers in fiscal 2025

Microsoft plans to spend $80 billion to build artificial intelligence-enabled data centers in fiscal 2025, the technology titan said Friday.

The company said more than half of that spending in the fiscal year, which ends in June, will be in the U.S.

Shares last traded up more than 1% in Friday's session. The stock is on track to snap a five-day losing streak.

— Alex Harring, Jordan Novet

About 4 out of every 5 S&P 500 stocks advance

A broad rally propelled the S&P 500 higher on Friday.

All 11 sectors that comprise the S&P 500 rose, pushing the benchmark index up about 1%. With that move, the S&P 500 is poised to snap a five-day negative streak.

Around 4 out of every 5 members of the S&P 500 are also tracking for gains. Vistra Corporation, which was a top performer in 2024, led the way on Friday with a jump of 7.2%. Super Micro Computer followed, also rising more than 7%.

Despite Friday's advance, the index is still on track to end the week down 0.7%.

— Alex Harring

Energy sector leads to the upside with weekly gain above 3%

The S&P 500 Energy sector is up about 1% on Friday, and is now up 3.3% week to date, according to FactSet.

Diamondback Energy and Devon Energy have been standouts in the group, rising 7.7% and 8.7% week to date, respectively.

Among the biggest oil names, ConocoPhillips has been a winner, rising more than 4%.

— Jesse Pound

Rivian Automotive, U.S. Steel among the names making moves midday

Here are some stocks making the biggest moves in midday trading:

• Rivian Automotive — Shares popped 19% after the electric vehicle maker's vehicle production and deliveries for 2024 met the company's previously announced guidance. This comes after the company had lowered its production target for the full year in October.
• U.S. Steel — Shares fell 6% following President Joe Biden's decision to block Japan's Nippon Steel from acquiring U.S. Steel. Biden said the proposed $14.9 billion takeover would create a risk for the nation's supply chains.
• Block — The fintech stock added 5.1% following an upgrade to outperform from market perform at Raymond James. Analyst John Davis believes the stock's valuation still looks attractive despite a recent run higher, and has renewed conviction in Block's 2025 acceleration story.

Read here for the full list.

— Sean Conlon

Look past Thursday's pullback, Deutsche Bank says

Investors shouldn't worry about the S&P 500's negative start to 2025, according to Deutsche Bank.

While the broad index pulled back in the first trading session of the new year on Thursday, macro strategist Henry Allen noted that also happened in the prior two calendar years. Both years, he added, went on to register gains above 20%.

"The first trading day has been a very poor guide to the rest of the year in recent times, so we shouldn't extrapolate things too far," Allen said in a Friday note to clients.

— Alex Harring

Ford, GM move higher after reporting sales numbers

Shares of Ford and General Motors both erased early losses after the automakers reported their best annual U.S. sales since 2019.

GM's sales rose 4.3% year over year to 2.7 million. The stock was up about 0.1% in late-morning trading after falling earlier in the day.

Ford's sales totaled 2.08 million from the year, up from just under 2 million in 2023. The stock was up 1.2%.

— Jesse Pound, Michael Wayland

Richmond Fed's Barkin optimistic about economy, counsels patience

With the economy in "a good place" and various levels of uncertainty ahead, Richmond Federal Reserve President Thomas Barkin said Friday that he and his colleagues can be patient in their approach to monetary policy.

"My baseline outlook is positive," said Barkin, who is not a voting member this year of the rate-setting Federal Open Market Committee. "How economic policy uncertainty resolves will matter. But, with what we know today, I expect more upside than downside in terms of growth."

The central banker noted multiple variables, particularly fiscal policy and tariffs, that could influence the Fed's rate moves.

"I expect the story for the coming year to be more about supply and demand — and perhaps geopolitics — than monetary policy," he said. However, he noted that "none of us know how all of this will play out. So, it's best to give it some time, and learn more about the path forward."

— Jeff Cox

Cerence surges more than 50% on expanded Nvidia partnership

Cerence shares jumped 55% after the maker of artificial intelligence assistants for autonomous vehicles announced an expanded partnership with Nvidia.

The collaboration will help the company improve its automotive large language models known as CaLLM. The model is powered by Nvidia's AI Enterprise.

— Samantha Subin

Manufacturing picture improved in December, ISM says

On the economic data front, the ISM manufacturing index came in at 49.3 for December. That is above expectations of 48.0, according to Dow Jones, but is still below the level of 50 that signifies expansion in the sector.

— Jesse Pound

Semiconductor stocks outperform in early trading

Chip stocks were an early bright spot for the market on Friday.

The VanEck Semiconductor ETF (SMH) rose 1.6%. Nvidia climbed 3%, and Western Digital added 2.4%.

— Jesse Pound

Stocks climb to start Friday

The major stock market averages opened higher on Friday as Wall Street looked to end a sluggish holiday week on a positive note.

The Dow rose 200 points, or 0.5%. The S&P 500 advanced 0.5%, and the Nasdaq Composite climbed 0.6%.

— Jesse Pound

U.S. Steel, Block among stocks making biggest premarket moves

Check out the companies making headlines before the bell:

• U.S. Steel — U.S. Steel shares slid nearly 8% after President Joe Biden blocked Japanese company Nippon Steel's $14.9 billion takeover of U.S. Steel, saying "U.S. Steel will remain a proud American company." Biden said the domestic steel industry is a national security priority.
• Block — Shares of the fintech company moved nearly 3% higher after Raymond James upgraded the stock to outperform from market perform, saying Block is trading at an attractive valuation even after its recent run. According to the firm, Block's seller gross payment volumes will be a catalyst for the stock's 2025 acceleration story.
• Carvana — The online used-car seller saw shares fall more than 2% after short selling firm Hindenburg Research on Thursday alleged that Carvana's recent turnaround is a "mirage" supported with unstable loans and accounting manipulation.

For the full list, read here.

— Pia Singh

Booze stocks fall after new advisory citing cancer risk

A group of alcoholic beverage companies saw shares falling in premarket trading after U.S. Surgeon General Dr. Vivek Murthy issued a warning on cancer risk due to alcohol consumption.

Constellation Brands and Anheuser-Busch InBev each dipped more than 1%, while Diageo PLC shares fell more than 2%.

The new advisory from Murthy outlined the direct link between alcohol consumption and increased cancer risk, which is said to be well-established for at least seven types of cancer, regardless of the type of alcohol that is consumed. For breast cancer specifically, 16.4% of total breast cancer cases are attributable to alcohol consumption, the advisory said.

— Yun Li

Biden says he will block U.S. Steel acquisition by Japanese firm

President Joe Biden announced Friday that he is blocking the proposed acquisition of U.S. Steel by Japanese firm Nippon Steel, citing nation security concerns.

"We need major U.S. companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America's national interests," Biden said in a statement.

Shares of U.S. Steel were down 8% in premarket trading.

— Jesse Pound

Hopes for 'Santa Claus rally' on thin ice

A holiday slump for the stock market means it would take a major rally on Friday for the "Santa Claus rally" to come to fruition.

"The SPX would need to close above 5974 to avoid a failing rally. As the saying goes, 'if Santa Claus should fail to call, bears may come to broad and wall'. While we aren't ready to call for a bear market, we continue to see downside risks for January," BTIG's Jonathan Krinsky said in a note to clients late Thursday.

Some of those risks include the fact that elevated levels for Treasury yields and the dollar appear to be hurting stocks, Krinsky said.

"Dollar and yields continue to exert upward pressure while breadth remains poor. Until that changes, downside volatility for stocks will continue," he added.

— Jesse Pound

Wolfe Research upgrades Chewy to outperform, names stock a top pick for 2025

Wolfe Research's top stock picks for the year includes Chewy.

The firm upgraded the online pet products retailer to an outperform rating from peer perform. Simultaneously, Wolfe analyst Shweta Khajuria set a price target of $42 for the stock.

Shares of Chewy have risen 1% in 2025, but ended last year up 42%. Khajuria's new price forecast is approximately 24% higher than where the stock closed on Thursday.

"We see upside to revenue and margin estimates, and we view valuation at 17x '26 EBITDA as highly reasonable. Improving macro environment, successful execution around efficiency gains, and several product catalysts should help improve fundamentals," Khajuria wrote.

Specifically, the analyst pointed to several key catalysts for the stock — accelerating customer and net sales growth, alongside international expansion — that should help drive more meaningful margin expansion for the stock. Khajuria believes that over the next two years, Chewy's year-over-year net sales growth can reach the mid-to-high single-digits.

Meanwhile, product catalysts such as the Chewy Health expansion, which includes vet clinics, will continue to boost the business higher.

"We believe the Street is not fully accounting for the potential impact of Sponsored Ads + benefits of Chewy Health to the company's [net sales per active customer] and margins in 2025 and 2026," Khajuria added.

— Lisa Kailai Han

Biden to block Nippon Steel acquisition of U.S. steel, report says

The Washington Post reported that President Joe Biden decided to block Nippon Steel's $14.9 billion acquisition of U.S. Steel, sending the latter company's stock down more than 9% in the premarket. An official announcement is expected as soon as Friday, per the report.

— Fred Imbert

European markets dip as trading gets underway on Friday

European markets dipped soon as trading got underway Friday, with the pan-European Stoxx 600 pulling back 0.3% by 8:35 a.m. London time.

Auto and mining stocks led losses, both falling close to 1%, while financial services stocks were among the few sectors to rise, adding 0.47%.

Regional bourses were also broadly lower, with France's CAC 40 falling 0.73%, while Germany's DAX pulled back by 0.35% and the U.K.'s FTSE 100 dipped 0.12%.

— Sophie Kiderlin

Chinese stock market slump deepens amid broader gains in Asia

SINGAPORE — China stocks extended declines on Friday in a bumpy start to the new year, despite gains in the broader Asia-Pacific region.

Mainland China's benchmark CSI 300 index fell 1.18% to close at 3,775.1648 after a volatile session, extending a decline of 2.9% the day before. Hong Kong's Hang Seng index rose 0.7% to 19,760.27.

South Korean markets shrugged off the country's political chaos, with the Kospi index rising 1.79% to close at 2,441.92 and the small-cap Kosdaq advancing 2.79% to 705.76.

Australia's S&P/ASX 200 rose 0.60% to settle at 8,250.50.

Japan markets remained closed for a holiday.

— Anniek Bao

U.S. stocks likely to deliver third 'banner year,' topping international returns, Capital Economics says

"A banner year for the S&P 500 may be followed by another" in 2025, Capital Economics senior markets economist Diana Iovanel wrote to clients Thursday.

"After a stellar 2024, we expect another strong year for U.S. equities in 2025, on the back of continued enthusiasm about AI and U.S. exceptionalism," Iovanel told clients. "Meanwhile, we think equities elsewhere will generally fare poorly, owing to another trade war."

The S&P 500 has done little since "the Fed's 'hawkish cut'" on Dec. 18, but the coming year is likely to bring "a total return of almost 20% over the year from MSCI's USA Index and about 10% from MSCI's World ex USA Index," the economist added. "That's because we expect the main drivers that boosted the U.S. stock market over 2024 to continue this year."

Catalysts include enthusiasm surrounding artificial intelligence boosting Big Tech stocks, "especially through higher valuations, with gains broadening across the stock market," plus U.S. economic outperformance relative to other major global economies, "lifting earnings expectations more than elsewhere," the London-based researcher said.

— Scott Schnipper

Stocks on track to close out losing week

Stocks are on pace to close out the week with losses. Here is where the major averages stand, as of Thursday's close:

• The Dow Jones Industrial Average is lower by 1.4%.
• The S&P 500 is lower by 1.7%.
• The Nasdaq Composite is lower by 2.2%.

— Sarah Min

ISM manufacturing index due out Friday

The ISM Manufacturing Purchasing Managers Index, or PMI, a measure of economic activity based on a survey of purchasing managers, is expected to have dropped slightly to 48.0 in December, down from 48.4 previously, according to Dow Jones consensus estimates.

The data is due out Friday at 10 a.m. ET.

— Sarah Min

Stock futures open little changed

U.S. stock futures opened little changed Thursday night.

Dow Jones Industrial Average futures rose 9 points, or 0.02%. S&P 500 futures and Nasdaq 100 futures gained 0.06% and 0.08%, respectively.

— Sarah Min