Wall Street wrapped up a significant week as U.S. stocks remained near all-time highs, closing with minimal changes on Friday. The S&P 500 hovered just below its record set the previous day, falling by less than 0.1%. The Dow Jones Industrial Average experienced a decline of 273 points, or 0.6%, while the Nasdaq composite gained 0.4%, also reaching a new record.
The stock market’s upward momentum has been largely driven by expectations that the Federal Reserve will cut its benchmark interest rate for the first time this year during its upcoming meeting. Such a move is anticipated to boost the economy, and mortgage rates have already declined in response to these expectations.
Recent labor market reports suggest that the job market may be stabilizing at a pace favorable to the Fed: slow enough to warrant support but not weak enough to indicate a looming recession, with inflation remaining in check. Investors are closely watching these developments, as a miscalculation on the Fed’s rate-cutting intentions could lead to market setbacks. The consensus among traders is that the Fed might reduce rates three times this year. Should the central bank decide to cut rates less frequently than expected, it could dampen market enthusiasm, even if other economic indicators perform well.
Scott Wren, a senior global market strategist at Wells Fargo Investment Institute, noted that both investors and the Fed aren’t currently anticipating a significant increase in inflation. A recent survey from the University of Michigan indicated that consumer expectations for inflation remain stable, with a preliminary estimate of 4.8% for the coming year, unchanged from the previous month. While longer-term inflation expectations have increased slightly, they remain below levels recorded earlier in the year when tariffs were announced.
As stocks held their ground near historic highs, some companies faced challenges. RH, a furniture retailer, saw its shares dip 4.6% after posting earnings and revenue that fell short of analysts’ expectations. The company’s CEO attributed this shortfall to “the polarizing impact of tariff uncertainty and the worst housing market in almost 50 years.” Oracle’s shares dropped 5.1%, becoming the biggest detractor from the S&P 500 index, although it had surged earlier in the week due to excitement around its artificial intelligence contracts.
Conversely, Super Micro Computer enjoyed a 2.4% increase after announcing it had begun high-volume shipments using equipment from Nvidia related to AI. Microsoft shares rose by 1.8% following the approval of its proposed changes to the Teams platform by European Union regulators, effectively concluding a protracted antitrust investigation.
Overall, the S&P 500 saw a decline of 3.18 points, settling at 6,584.29. The Dow dropped by 273.78 points to 45,834.22, while the Nasdaq gained 98.03 points to reach 22,141.10.
Internationally, European stock markets remained relatively stable after a strong showing in Asia. Japan’s Nikkei 225 rose 0.9% to record levels, while Hong Kong’s Hang Seng index climbed 1.2%.
In the bond market, the yield on the 10-year Treasury note increased slightly to 4.06%, recovering from earlier declines. This uptick in yields coincided with growing expectations that the Fed may soon cut interest rates again. The Fed has maintained its current rates largely due to concerns about the inflationary impact of tariffs imposed by the Trump administration.
Tensions have surfaced regarding the Fed’s decisions, with President Trump expressing frustration over the central bank’s inaction. He has even threatened to dismiss Fed Chair Jerome Powell, whom he has disparagingly labeled “Too Late,” and is reportedly seeking to remove Federal Reserve Governor Lisa Cook over allegations of mortgage fraud.
