Wall Street concluded a strong week on Friday, poised near its record levels as U.S. stocks maintained momentum. The Standard & Poor’s 500 index dipped slightly, down less than 0.1% from its all-time high set the previous day. The Dow Jones industrial average fell by 273 points, or 0.6%, while the Nasdaq composite managed to gain 0.4%, extending its record established on Thursday.
Investor optimism has surged amid expectations that the Federal Reserve will cut its main interest rate for the first time this year during its upcoming meeting. Anticipation of this move has already influenced mortgage rates, which have declined in response. Recent economic reports indicate a job market potential that could persuade the Fed to act; it appears strong enough not to trigger a recession, yet soft enough to justify a rate cut, all while inflation remains stable.
However, the market’s trajectory hinges significantly on these expectations. If the Federal Reserve implements fewer rate cuts than the anticipated three this year, disappointment could lead to market corrections, even if the broader economy continues to perform well, and external factors, such as tariffs, do not introduce inflationary pressures.
Scott Wren, senior global market strategist at Wells Fargo Investment Institute, noted that investors and the Fed seem to believe inflation will not surge significantly anytime soon. This sentiment echoes findings from a University of Michigan survey showing consumer expectations for inflation holding steady at 4.8% for the coming year, unchanged since the prior month. Although long-term inflation expectations have seen a slight increase, they remain below levels observed in April when tariffs were announced.
Not all companies fared well as Wall Street clawed its way near records. Furniture retailer RH experienced a significant decline of 4.6% after it reported disappointing profit and revenue, along with a reduced revenue forecast for the fiscal year. CEO Gary Friedman attributed the setbacks to uncertainties around tariffs and one of the weakest housing markets in decades. Oracle’s stock dropped by 5.1%, becoming the largest drag on the S&P 500. However, this decline followed a notable surge earlier in the week driven by excitement over its multibillion-dollar contracts in artificial intelligence.
In contrast, companies with ties to the AI boom showed resilience. Super Micro Computer’s stock rose by 2.4% after announcing high-volume shipments of AI-capable technology. Additionally, Microsoft’s shares increased by 1.8% after resolving a longstanding antitrust investigation with the European Commission regarding its Teams platform.
Across the broader market, the S&P 500 fell by 3.18 points to 6,584.29, while the Dow Jones industrial average saw a drop of 273.78 points to 45,834.22. The Nasdaq composite, however, rose by 98.03 points to reach 22,141.10.
Internationally, European stock indexes were mostly stable, following a rise in Asian markets, where Japan’s Nikkei 225 gained 0.9% and Hong Kong’s Hang Seng increased by 1.2%.
In the bond market, the yield on the 10-year Treasury climbed to 4.06%, recovering from earlier declines. Expectations surrounding imminent rate cuts by the Fed have contributed to fluctuating yields. The Fed has maintained its current stance since 2025, largely in response to concerns that tariffs could exacerbate inflation on everyday consumer goods. This inaction has drawn criticism from President Trump, who has publicly expressed dissatisfaction with Fed Chair Jerome Powell, labeling him “Too Late,” and has escalated efforts to remove Federal Reserve Governor Lisa Cook amid allegations of misconduct.
