Wall Street Edges Higher, Eyes Record-Setting Week Finish/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks inched higher Friday, with the S&P 500, Dow, and Nasdaq all extending record highs. Optimism about Federal Reserve interest rate cuts continues to drive the rally. Still, economists warn markets could stumble if rate cuts don’t meet expectations.
Wall Street Edges Higher, Eyes Record-Setting Week Finish – Quick Looks
- S&P 500 rose 0.1%, marking its ninth winning week in 10.
- Dow Jones gained 17 points; Nasdaq climbed 0.3%.
- Russell 2000 hit a record for the first time since 2021.
- Markets lifted by expectations of ongoing Federal Reserve rate cuts.
- FedEx rose 1.4% after better-than-expected quarterly results.
- Lennar fell 5% on weaker housing revenue despite profit beat.
- Housing sector remains pressured, but falling rates may boost demand.
- Analysts warn markets vulnerable if Fed cuts disappoint.
- Fed Chair Powell cautioned on balancing inflation and weak jobs.
- Asian markets mixed; Japan’s Nikkei dropped after BOJ policy news.
Deep Look: Wall Street Coasts Toward Another Record Week Amid Fed Optimism
NEW YORK — Wall Street is closing out yet another record-setting week as U.S. markets posted modest gains Friday morning, capping off one of the strongest runs for equities in years.
The S&P 500 edged up 0.1%, pacing toward its ninth winning week in the last 10. The Dow Jones Industrial Average added 17 points, or less than 0.1%, while the Nasdaq composite rose 0.3%.
All three major U.S. indexes notched all-time highs on Thursday, with the small-cap Russell 2000 also breaking its previous record set in 2021.
Fed’s Rate Cuts Power Market Confidence
The rally continues to be fueled by widespread expectations that the Federal Reserve will cut interest rates further after delivering its first reduction of the year on Wednesday. Lower borrowing costs typically help stimulate growth across sectors, particularly housing and business investment.
But optimism comes with risk: If the Fed doesn’t deliver as many cuts as markets anticipate, the stock surge could quickly reverse.
Fed Chair Jerome Powell acknowledged the precarious environment, noting that inflation remains stubbornly high while the labor market is weakening.
“The Fed is in an unusual situation,” Powell said. “We must balance both inflation control and job support, but our tools affect each differently.”
Corporate Movers: FedEx, Lennar Diverge
Corporate earnings news also influenced trading.
- FedEx rose 1.4% after reporting stronger-than-expected quarterly profits and revenues, boosted by gains in domestic shipping. Still, analysts flagged tariff uncertainties that could weigh on future results.
- Lennar dropped 5% despite a profit beat, as the homebuilder reported weaker revenue. Executive Chairman Stuart Miller pointed to ongoing challenges in housing, including the need to offer incentives that lowered average sales prices.
Lower rates could ease housing pressures, with mortgage costs already falling in anticipation of additional Fed action.
Economic Balancing Act
The Fed lowered its benchmark rate by a quarter-point, signaling further cuts may arrive later this year and into 2026. The move aims to stabilize a cooling job market while keeping inflation in check.
The central bank’s challenge is acute: raising rates helps fight inflation but slows hiring, while cutting rates supports jobs but risks fueling prices. With only one main policy tool, the Fed’s balancing act grows more complex.
Global Market Snapshot
International markets followed with muted reactions:
- Japan’s Nikkei 225 fell 0.6% after the Bank of Japan announced plans to sell part of its vast holdings of domestic stock funds, while leaving rates unchanged.
- China’s markets were mixed ahead of a high-stakes call between President Donald Trump and President Xi Jinping on tariffs and the future of TikTok’s U.S. operations.
- European indexes opened slightly higher, tracking Wall Street’s momentum.
Meanwhile, in bonds, the 10-year U.S. Treasury yield held steady at 4.12%, little changed from Thursday’s 4.11%.
Looking Ahead
With Wall Street powering through another record week, investors are watching closely to see how the Fed navigates its dual mandate. Any deviation from expected rate cuts could spark volatility, especially given high valuations across the market.
For now, however, confidence remains strong as stocks extend their historic run.
You must Register or Login to post a comment.