U.S. stock markets faced a significant setback after an unprecedented surge that added $15 trillion in value and pushed major indexes like the S&P 500, Nasdaq 100, Dow Jones Industrial Average, and Russell 2000 to record highs. This rally was primarily influenced by expectations of rapid interest rate cuts from the Federal Reserve, creating an optimistic environment for investors. Notably, the Russell 2000 outperformed its peers, climbing 3% for the week and setting the stage for its seventh consecutive weekly gain—its longest rally since late 2020.
Investor sentiment received a boost as President Trump announced progress in U.S.-China trade negotiations, improving confidence in multinational companies and exporters. Although specifics are still unfolding, the markets interpreted his comments as a positive indication, raising hopes for a possible resolution that could ease tariffs and diminish global supply chain uncertainties. Such a breakthrough could bolster corporate earnings and enhance long-term investor sentiment, particularly for sectors reliant on international trade, including technology and manufacturing.
Bridgewater founder Ray Dalio cautioned against rising risks in the U.S. monetary system due to escalating debt levels, advising investors to allocate 10% of their portfolios to gold and other non-fiat assets. Meanwhile, discussions about a potential $550 billion fund to enhance domestic manufacturing—prioritizing critical sectors like semiconductors and mineral resources—are on the table.
The Dow Jones Industrial Average gained 98 points, or 0.2%, while the S&P 500 experienced a similar increase. The Nasdaq Composite saw a gain of 0.3%, buoyed by robust performance from the technology sector. Additionally, small-cap stocks were highlighted by the Russell 2000, which closed up 0.1% at a record high, showcasing the resilience of domestically-focused companies. Apple led the tech sector with a 1.4% increase, spurred by the global launch of its latest iPhone, while Tesla also performed well, climbing 2%.
In a noteworthy development, Oracle has taken a substantial step toward a deal involving TikTok, alongside investors such as Silver Lake and Andreessen Horowitz, acquiring an 80% stake in the social media platform. Oracle is set to manage U.S. user data on its Texas servers, ensuring TikTok can continue operations in the U.S. amidst looming regulatory challenges. Oracle shares experienced a 1.88% increase on Friday, marking a 28% gain for the month, as investors anticipated a boost in cloud revenue from the TikTok data management arrangement. Morningstar estimates that TikTok contributes around 5% to Oracle’s Cloud Infrastructure business, underscoring the significance of this deal.
Earlier in the week, the Federal Reserve made its first interest rate cut since December, lowering the benchmark rate by 0.25%. The markets reacted positively to Fed Chair Jerome Powell’s characterization of the adjustment as a “risk management” move, suggesting a heightened awareness of economic uncertainties. Lower borrowing costs are expected to invigorate business investment and consumer spending, providing an additional boost to stocks, particularly in the technology and capital-intensive industries.
The Russell 2000 has recently broken a 967-trading day streak without reaching a new closing high—the second-longest such stretch on record—indicating renewed investor optimism regarding the U.S. economy. Its performance suggests a wider base of growth among domestic companies rather than relying solely on mega-cap tech.
In other market developments, UPS faced downgrades by BMO Capital Markets due to ongoing macro challenges, with the firm cutting the stock to “market perform” amid persistent revenue declines. Conversely, NANO Nuclear Energy surged nearly 15% following news of a $6.2 million sale of its ODIN microreactor design to Cambridge Atom Works in the U.K., allowing the company to concentrate on its gas-cooled reactor technology.
Nvidia’s $5 billion investment in Intel was another highlight, fostering optimism in the semiconductor sector as both companies aim to co-develop chips for PCs and data centers amid growing collaboration within the industry.
Gold continued to be seen as a safe haven, with futures rising 0.3% on Friday and extending a five-week winning streak. This increase is attributed to the Fed’s rate cuts and expectations of a weaker dollar, offering a hedge against mounting global debt pressures.
Looking ahead, investors are advised to monitor several key factors that will influence market direction: the final details of the TikTok agreement, the progression of U.S.-China trade discussions, and forthcoming macroeconomic data regarding inflation, consumer spending, and interest rates. Analysts suggest that continued advancements in these areas could position the U.S. market for further record highs, though concerns over geopolitical and regulatory risks linger.
