The stock market ended the week on a high note, with major indexes posting significant gains. This surge comes as Wall Street’s expectations for a substantial interest rate cut by the Federal Reserve have risen sharply.
Key Takeaways
- Major U.S. stock indexes posted strong weekly gains.
- The likelihood of a 0.5% interest rate cut by the Federal Reserve has increased.
- Tech stocks led the rally, with the Nasdaq Composite and S&P 500 showing notable gains.
Market Performance
U.S. stocks gained ground on Friday, capping off a week of strong performance. The S&P 500 rose by 0.5%, while the tech-heavy Nasdaq Composite climbed 0.7%. The Dow Jones Industrial Average also added 0.5%, or about 300 points.
For the week, the Nasdaq gained more than 5%, marking its best week of the year. The S&P 500 increased by 4%, and the Dow Jones Industrial Average rose by 2%. These gains come amid heightened debate around interest rate policy and recent market volatility.
Rising Odds of a Jumbo Rate Cut
The market is increasingly warming to the likelihood of a half-point rate cut by the Federal Reserve. Traders are now pricing in a 49% chance of a 50 basis point move next week, compared to just 15% on Thursday. This shift in expectations follows reports from the Financial Times and The Wall Street Journal, suggesting that the size of the Fed’s upcoming decision will be a close call.
Former New York Fed President Bill Dudley has also weighed in, stating that there is a "strong case" for a deeper cut. The yield on the benchmark 10-year Treasury slipped by 2 basis points to around 3.6% on Friday.
Factors Influencing the Market
Several factors have contributed to the recent market performance:
- Labor Market Concerns: Worries about a labor market slowdown and the risk of a recession have fueled market volatility.
- Inflation and Jobs Data: Recent data on inflation and employment have influenced traders’ expectations for the Fed’s next move.
- Corporate Earnings: Companies like FedEx, General Mills, and Darden are set to report earnings, which could further impact market sentiment.
Individual Stock Movements
Several individual stocks made notable moves on Friday:
- Trump Media & Technology Group: Shares rose by 10% after Donald Trump announced he would not sell his shares.
- Boeing: Shares fell by almost 4% as factory workers initiated a strike, risking a credit rating downgrade.
- Adobe: The software company’s shares sank by nearly 9% after a disappointing fourth-quarter forecast.
- RH: Shares surged by more than 20% following strong revenue and earnings reports.
- Oracle: The company’s shares rose by 1% after boosting its fiscal 2026 forecast.
Global Market Impact
The U.S. stock market’s performance had a ripple effect on global markets. The Stoxx Europe 600 and Hong Kong’s Hang Seng Index rose, while Japan’s Nikkei 225 fell. Gold prices set a new record, rising 1.2% to $2,581.30 per troy ounce.
Conclusion
The stock market ended the week with significant gains, driven by rising expectations for a substantial interest rate cut by the Federal Reserve. As traders and investors look ahead to the Fed’s decision next week, market volatility is likely to continue.