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NEW YORK:
Wall Street extended its rally on Friday, sending S&P 500 and Nasdaq to all-time closing highs as trade deal hopes fuelled investor risk appetite and economic data helped solidify expectations for rate cuts from the US Federal Reserve.
Stocks pared gains after US President Donald Trump terminated trade negotiations with Canada in response to its digital tax on technology companies. Even so, all three major US stock indexes posted weekly gains.
Upon reaching its record closing high, the tech-heavy Nasdaq confirmed it entered a bull market when it touched its post “liberation day” trough on April 8. The blue-chip Dow remained 2.7% below its record closing high reached on December 4.
“This market’s been pretty resilient,” said Chuck Carlson, Chief Executive Officer at Horizon Investment Services in Hammond, Indiana. “Investors are riding momentum and looking for breakouts.”
“They don’t want to get caught on the wrong side of this thing,” Carlson added. “Many investors already have missed out. And now you have the S&P flirting with an all-time high.”
The Personal Consumption Expenditures report from the Commerce Department showed consumer income and spending unexpectedly contracted in May. And while tariffs have yet to affect price growth, inflation continues to hover above the Fed’s 2% annual target.
Financial markets have priced in a 76% likelihood that the Fed will implement its first rate cut of the year in September, with a smaller, 19% probability of a rate cut coming as soon as July, according to CME’s FedWatch tool.
Washington and Beijing reached an agreement to expedite rare-earth shipments from China to the US, an official said, well ahead of the July 9 expiry of the 90-day postponement of US President Donald Trump’s “reciprocal” tariffs.
Additionally, US treasury secretary said the administration’s trade deals with 18 of the main US trading partners could be done by the September 1 Labour Day holiday.
The Dow Jones Industrial Average rose 432.43 points, or %, to 43,819.27, the S&P 500 gained 32.05 points, or 0.52%, to 6,173.07 and the Nasdaq Composite gained 105.55 points, or 0.52%, to 20,273.46.
Among the 11 major sectors of the S&P 500, consumer discretionary enjoyed the biggest percentage gain, while energy shares were the laggards.
Chipmaker Micron’s upbeat forecast revived investor confidence in artificial intelligence-related stocks, while Nvidia rose 1.8%, edging closer to $4 trillion market capitalisation after its position as the world’s most valuable company. Nike’s shares jumped 15.2% after forecasting a smaller-than-expected drop in first-quarter revenue.
Advancing issues outnumbered decliners by a 1.29-to-1 ratio on the New York Stock Exchange (NYSE). There were 347 new highs and 55 new lows on the NYSE. On the Nasdaq, 2,111 stocks rose and 2,342 fell as declining issues outnumbered advancers by a 1.11-to-1 ratio.
The S&P 500 posted 35 new 52-week highs and six new lows while the Nasdaq Composite recorded 101 new highs and 68 new lows. Volume on US exchanges was 22.07 billion shares, compared with the average of 18.27 billion for the full session over the last 20 trading days.
Trump’s policymaking causes angst
As Wall Street puts April’s tariff shakeout in the rearview mirror and indexes set record highs, investors remain wary of US President Donald Trump’s rapid-fire, sometimes chaotic policymaking process and see the rally as fragile.
The S&P 500 and Nasdaq composite index advanced past their previous highs into uncharted territory on Friday. Yet traders and investors remain wary of what may lie ahead.
Trump’s April 2 reciprocal tariffs on major trading partners roiled global financial markets and put the S&P 500 on the threshold of a bear market designation when it ended down 19% from its February 19 record-high close.
This week’s leg up came after a US-brokered ceasefire between Israel and Iran brought an end to a 12-day air battle that had sparked a jump in crude prices and raised worries of higher inflation. But a relief rally started after Trump responded to the initial tariff panic that gripped financial markets by backing away from his most draconian plans.
JP Morgan Chase, in the midyear outlook published on Wednesday by its global research team, said the environment was characterised by “extreme policy uncertainty.”
“Nobody wants to end a week with a risk-on tilt to their portfolios,” said Art Hogan, market strategist at B Riley Wealth. “Everyone is aware that just as the market feels more certain and confident, a single wildcard policy announcement could change everything,” even if it does not ignite a firestorm of the kind seen in April.
