The Nasdaq composite finished the week at an all-time high, as investors are hopeful that a potential interest-rate cut by the Federal Reserve will continue to boost the market’s growth. The Nasdaq and the S&P 500 index both saw weekly increases of over 1%. The Fed’s board of governors is likely to lower the benchmark rate by a quarter point at next week’s two-day policy meeting.
“Investors are currently taking a cautious approach,” said Chris Kampitsis. “Unless there are major global or economic changes, this is where stocks will stay until we receive the interest-rate announcement.” On Friday, the Nasdaq increased by 0.4%, marking its 25th record close of the year. The S&P 500 dropped slightly. The Dow Jones Industrial Average fell by 0.6%, losing 274 points, after rising above 46000 for the first time on Thursday. Clear signs of an ongoing surge in artificial intelligence also contributed to the rise in stock prices. The group of tech giants known as the Magnificent Seven—Amazon.com, Alphabet, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla—has reached a market capitalization of over $20 trillion for the first time. Investors are eager for riskier assets, leading to a week filled with many initial public offerings. On its first day of trading on the Nasdaq, shares of Gemini Space Station, the crypto exchange run by the Winklevoss twins, jumped 14%.
On Friday, hopes for a rate cut increased as the University of Michigan’s consumer-sentiment index fell to its lowest point in four months. The disappointing data showed that long-term inflation expectations have increased as Americans’ trust in the economy declines. Traders believe that a quarter-point reduction is almost certain, while there is a slight chance the Fed might go for a half-point cut. Recent data on inflation and jobs has led some investors to be careful about the market and the economic future. The numbers raised worries about a situation where growth is slow, prices keep going up, and more people are out of work. Kathy Jones, stated, “We are currently priced for a favorable outcome, characterized by low volatility and a slight drop in rates that supports the economy, while corporate profits appear strong.” “There is definitely a chance that things may not go as planned.”
Investors looking for security and protection against inflation turned to gold, pushing the price of the precious metal to a new high of $3,649 per troy ounce. The yield on the 10-year Treasury note, an important measure of borrowing costs in the economy, rose slightly to 4.058%. Warner Bros. Discovery’s shares rose by 17% on Thursday indicated that Paramount Skydance is getting ready to make a bid.