Wall Street continued its upward trajectory on Friday, capping off a record-setting week. The Standard & Poor’s 500 index rose by 0.5%, marking its sixth winning week in the last seven. The Dow Jones industrial average increased by 172 points, or 0.4%, while the Nasdaq composite climbed 0.7%. All three indexes reached all-time highs for the second consecutive day, buoyed by market expectations that the Federal Reserve will maintain its course of cutting interest rates to stimulate the economy following a reduction made earlier in the week.
A significant contributor to the market’s upswing was FedEx, which reported stronger-than-anticipated profit and revenue for the latest quarter, seeing its shares rise by 2.3%. The company attributed much of its success to a robust domestic package business. In a similar vein, Newmont, a gold mining company, surged by 4.3% after selling its investment in Canada’s Orla Mining for $439 million. This performance added to Newmont’s outstanding run, as its stock has more than doubled this year amid surging gold prices, influenced by low interest rate expectations and concerns about high inflation as well as increasing government debt.
Conversely, Lennar, a homebuilder, saw its shares drop by 4.2% following a disappointing revenue report. Executive Chairman Stuart Miller indicated that the current housing market pressures forced Lennar to offer extra incentives to boost sales, ultimately lowering the average sales price for homes.
The S&P 500 finished the day at 6,664.36, increasing by 32.40 points. The Dow closed at 46,315.27, up by 172.85 points, while the Nasdaq concluded at 22,631.48, gaining 160.75 points.
If the Federal Reserve continues its trend of lowering interest rates, it could provide a much-needed boost to the struggling housing market, with mortgage rates already declining in anticipation of such a campaign. Lower rates might also mitigate concerns regarding the increasing expense of the U.S. stock market. However, with rising expectations for rate cuts, analysts suggest a potential for a sharp market decline if the Fed fails to meet these projections. This week, Fed officials indicated a likelihood of future rate reductions, aiming to support a slowing job market, which has made job hunting increasingly challenging for U.S. workers.
Fed Chair Jerome Powell cautioned that the central bank finds itself in a delicate situation, needing to navigate the conflicting demands of high inflation and a weakening job market. The challenges are compounded by uncertainties surrounding tariffs imposed by President Trump, which threaten to elevate inflation temporarily. The Fed’s role in addressing both inflation and unemployment is constrained, as adjustments to interest rates aimed at improving one can inadvertently hinder the other in the short term.
Scott Wren, a senior global market strategist at Wells Fargo Investment Institute, warned that the stock market might experience increased volatility following its recent record highs, particularly as economic growth slows and political uncertainties loom.
Internationally, stock markets have mostly declined across Europe and Asia. Japan’s Nikkei 225 dropped by 0.6% after the Bank of Japan announced plans to sell a portion of its Japanese stock fund holdings while maintaining steady interest rates. In China, indexes finished mixed as traders awaited a phone call between President Trump and President Xi Jinping. After their conversation, Trump described it as productive, with both leaders agreeing to meet at a regional summit in South Korea at the end of October.
In the bond market, Treasury yields remained stable, with the yield on the 10-year Treasury inching up to 4.12% from 4.11% at the previous close.
