Wall Street Nears Record High Amid Rate Hopes/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The S&P 500 approached record levels Friday, driven by investor optimism about a potential Federal Reserve interest rate cut. Strong earnings from retailers and easing inflation expectations added momentum to the rally. Wall Street’s gains reflect growing confidence despite recent market volatility and economic uncertainty.
Wall Street Nears Record High as Rate Cut Hopes Fuel Rally: Quick Looks
- S&P 500 rose 0.3%, nearing its October record
- Dow Jones and Nasdaq also saw modest gains
- Ulta Beauty jumped 14% on strong earnings and raised forecast
- Victoria’s Secret stock surged 13.2% after upbeat outlook
- Netflix announced $72B deal to acquire Warner Bros.
- Paramount Skydance dropped 6.1% after losing out on Warner Bros. bid
- SoFi Technologies fell 6.3% after stock sale announcement
- Fed expected to cut interest rates at upcoming meeting
- Inflation data in line with forecasts, at 2.8%
- Global markets broadly higher, except Japan’s Nikkei, down 1.1%
Wall Street Edges Toward Record as Markets Cheer Possible Fed Rate Cut
Deep Look
NEW YORK — U.S. stocks climbed Friday, with the S&P 500 flirting with its all-time high as investor optimism mounted over a potential interest rate cut from the Federal Reserve next week. Bolstered by strong earnings from major retailers and signs of cooling inflation expectations, the market continued its recent rebound after weeks of volatility.
As of midmorning, the S&P 500 had gained 0.3%, briefly surpassing its record closing level set in October before easing slightly. The Dow Jones Industrial Average added 164 points, also up 0.3%, while the Nasdaq Composite rose 0.4%.
If the S&P 500 closes at a new high, it would underscore the market’s ability to push through concerns over interest rate hikes, the artificial intelligence investment boom, and crypto market turbulence.
Retail Earnings Spark Investor Optimism
Retailers helped lead the rally. Ulta Beauty soared 14% after reporting better-than-expected quarterly earnings and revenue, along with a raised full-year sales forecast. CEO Kecia Steelman acknowledged consumer pressure but noted strength in online sales and broad category growth.
Victoria’s Secret also impressed investors by posting a narrower loss than expected and lifting its full-year sales outlook, sending its shares up 13.2%.
Meanwhile, Warner Bros. Discovery shares rose 3.6% after Netflix announced a $72 billion acquisition deal involving cash and stock, contingent on Warner’s split from Discovery Global. Netflix, after a volatile response, saw its stock dip 0.6% by midday, while Paramount Skydance — previously seen as a leading contender to acquire Warner Bros. — fell 6.1%.
Market Sentiment Buoyed by Fed Expectations
Investors are increasingly confident that the Fed will cut its benchmark interest rate at its December 9–10 meeting, a move that would mark the third rate cut this year. Such cuts typically encourage borrowing, boost consumer and business spending, and support higher asset prices.
Markets had previously been rattled by fears that rates would remain high for longer due to persistent inflation. But recent signs of economic softening and stabilizing prices have shifted sentiment.
Friday’s economic data gave no reason to alter those expectations. The Fed’s preferred inflation measure showed prices rose 2.8% year-over-year in September, right in line with economists’ forecasts. Core inflation also held steady, providing evidence that inflation may be stabilizing without additional rate hikes.
In a separate report, the University of Michigan’s consumer survey showed Americans now expect 4.1% inflation over the next year — the lowest forecast since January and down from 4.5% a month ago. Lower inflation expectations reduce the risk of a self-reinforcing cycle where expectations drive actual price increases.
Tech and Fintech Stocks See Mixed Results
On the downside, SoFi Technologies fell 6.3% to $27.73 after announcing plans to raise $1.5 billion by issuing new shares at $27.50 apiece — a move aimed at strengthening its balance sheet but dilutive to existing shareholders.
Technology and fintech stocks have seen mixed reactions recently, with enthusiasm for artificial intelligence investments offset by broader concerns about valuations and rising operational costs.
Bond Market Steady, Global Stocks Mostly Higher
In the bond market, Treasury yields remained mostly unchanged. The yield on the 10-year Treasury ticked up slightly to 4.12%, up from 4.11% the day prior.
International stock markets also saw broad gains:
- Germany’s DAX rose 0.8%
- South Korea’s Kospi jumped 1.8%
- Tokyo’s Nikkei 225 fell 1.1% after data showed household spending in Japan declined 3.0% in October — the sharpest drop since January 2024. Concerns over potential rate hikes by the Bank of Japan continue to weigh on Japanese equities.
Wall Street’s Rally Faces Key Week Ahead
After a volatile few months, the U.S. stock market has settled into a calmer rhythm — at least temporarily — with investors cautiously hopeful that inflation is easing and the Fed will respond by cutting rates.
But the road ahead remains uncertain. While consumer resilience and strong corporate profits are providing support, potential headwinds include geopolitical tensions, lingering inflationary pressure in services, and the impact of higher borrowing costs.
With the Fed’s decision imminent and the holiday shopping season in full swing, Wall Street is bracing for a pivotal week that could set the tone for how the year ends.
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