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US stocks stepped higher on Friday, shaking off a downbeat start to 2025 as Tesla ( TSLA ) and Nvidia ( NVDA ) led a tech-heavy comeback.

The S&P 500 ( ^GSPC ) rose 1.3%, while the Dow Jones Industrial Average ( ^DJI ) gained 0.8%. The tech-heavy Nasdaq Composite ( ^IXIC ) led the gains with an increase of 1.8%.

Friday was the last day for the S&P 500 ( ^GSPC ) to pull off a "Santa Claus" rally , watched closely as a historical harbinger of solid returns for January and the year.

But hopes dimmed after the benchmark fell again on Thursday to notch a five-session losing streak, the longest since April. The S&P 500 and Dow both ended the holiday-shortened week with losses of over 1%, while the Nasdaq is facing a weekly drop of 2%.

But tech stocks led Friday's rebound, as Tesla shares rose 8% after the EV maker said its sales in China climbed to a record high in 2024. Tesla's first yearly decline in global sales dragged the stock down 6% on Thursday. Meanwhile, Nvidia shares were up more than 4% after another sizable gain on Thursday.

US Steel ( X ) stock slid 5% after President Joe Biden blocked Japanese buyer Nippon Steel's $14.9 billion takeover of the company, which had become a lightning rod for political opposition.

On the data docket, the slump in US manufacturing lessened in December, according to new a fresh reading from the the Institute for Supply Management's (ISM) Purchasing Managers Index. The figure of 49.3% is 0.9% higher than November's data, but still failed to clear the 50-point threshold, which indicated a contraction.

The reading is another data glimpse into the health of US economy and will help influence the Federal Reserve's next decision on whether to cut interest rates.