Wall Street Hits New Highs as Rate Cut Bets Rise Despite Trade Tensions
US stock markets showed positive movement on Friday. The S&P 500 added 32.05 points, or 0.52%, to end the session at 6,173.07, and the Nasdaq rose 105.55 points, also 0.52%, and settled at 20,273.46, both all-time closing highs. The Dow Jones Industrial Average rose 432.43 points, or 1.00%, to 43,819.27. All three major indexes closed the week in positive territory, lifted by investors' attention to signals of economic health and signs of trade tensions easing.
Wall Street rose on increasing hopes for interest rate cuts. Consumer spending and income fell in May, according to the Commerce Department. Inflation remained above the Fed's 2% target. Consumer sentiment improved slightly but was still lower than it was late last year. These factors helped raise the chances of a Fed rate cut, with markets pricing in a 76% likelihood for September and a 19% chance in July, according to CME's FedWatch.
Trade News Boosts Optimism, Then Dampens It
The markets initially rallied on the news that the U.S. and China agreed to expedite shipments of rare earth minerals days before the July 9 deadline associated with Trump's "reciprocal" tariffs. Treasury officials also suggested that deals with 18 other big U.S. trading partners could be completed by Labor Day. But investor enthusiasm was dampened when President Trump abruptly canceled trade discussions with Canada due to its digital tax on American tech companies.
Analysts said investor sentiment was still positive despite the setback. "People are chasing momentum," said Chuck Carlson of Horizon Investment Services. "They don't want to miss this rally."
Stocks, Sectors, and Market Action
Consumer discretionary stocks were top performers, while energy shares lagged. Micron's upbeat earnings outlook boosted AI-related stocks. Nvidia gained 1.8 percent as it moved towards a $4 trillion market value. Nike shares jumped 15.2% after projecting a smaller revenue drop than expected.
On the NYSE, advancing issues outnumbered decliners by a 1.29-to-1 ratio. There were 347 new highs and 55 new lows. The situation on the Nasdaq was different, however, as there were more stocks declining than advancing, resulting in a 1.11-to-1 ratio of down stocks to up ones. The S&P 500 had 35 new 52-week highs and no new lows, while the Nasdaq recorded 101 new highs and 15 new lows. The total trading volume on U.S. exchanges was 22.07 billion shares, compared with the 20-day average of 18.27 billion.
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