U.S. stock markets experienced significant gains, closing at record highs on Friday, buoyed by a recent interest rate cut from the Federal Reserve and optimism surrounding ongoing U.S.-China trade negotiations. All three major stock indexes finished the day positively and capped off a prosperous week.
The Dow Jones Industrial Average (DJI) increased by 0.4%, or 172.85 points, closing at 46,315.27, which marks a historic high for the index. Of its 30 components, 14 ended in positive territory, while 15 declined, with one remaining unchanged. During trading, the blue-chip index hit an intraday peak of 46,396.47.
The tech-focused Nasdaq Composite rose by 0.7%, or 160.75 points, to finish at 22,631.48, once again driven by strong performances from technology giants. It reached an intraday high of 22,645.11. Among the stars of this index was AppLovin Corp. (APP), a company specializing in AI-driven technology services, whose stock surged 4.5% and currently holds a Zacks Rank #1 (Strong Buy).
The S&P 500 also recorded a new closing high, advancing 0.5% to close at 6,664.36. Within this broad-market index, six of the 11 sectors ended positively, with the Technology Select Sector SPDR (XLK) gaining 1%, while the Energy Select Sector SPDR (XLE) fell by 1.3%. The CBOE Volatility Index (VIX), known as the fear gauge, decreased by 1.6% to settle at 15.45. The day’s trading volume was notably high, with 27.78 billion shares traded, significantly surpassing the 20-session average of 17.41 billion. This marks the highest trading volume since early April. On the New York Stock Exchange (NYSE), decliners outnumbered advancers by a ratio of 1.43-to-1, and a similar trend was seen on the Nasdaq, which recorded a 1.42-to-1 ratio favoring declining issues.
Last week, on September 17, the Federal Open Market Committee (FOMC) announced a widely anticipated 25-basis-point cut in the benchmark lending rate, bringing it down to a range of 4-4.25%. This decision marked the first interest rate reduction of 2025, with 11 out of 12 Fed voting members supporting the move; only one member dissented, advocating for a more significant half-point cut. Additionally, the Fed’s dot-plot projections indicate two more rate cuts of 25 basis points this year, along with further cuts anticipated in 2026 and 2027. This low-interest-rate environment is expected to enhance the attractiveness of stock investments by lowering the discount rate and ultimately increasing the net present value of equities. Sectors such as technology, consumer discretionary, and cryptocurrency stand to benefit the most.
In geopolitical news, a productive phone call occurred between U.S. President Donald Trump and Chinese President Xi Jinping, during which notable progress was made regarding the Chinese app TikTok. Although a final agreement hasn’t been reached, Trump tweeted about the positive developments, mentioning essential topics like trade and the Russian-Ukraine conflict. He expressed optimism that the TikTok deal is moving forward.
Overall, Wall Street had a commendable week; the Dow, S&P 500, and Nasdaq all posted weekly increases of 1%, 1.2%, and 2.2%, respectively. The Fed’s interest rate decision and indications of further monetary easing have fostered confidence among investors in equities and other risky assets.
