On Friday morning, an end-of-week rally in stocks was observed, propelling the Dow, S&P 500, and tech-heavy Nasdaq Composite to new record highs. The Dow increased by 473 points, representing a rise of 1.01%, concluding the session at 47,207.12. The blue-chip index has achieved a historic milestone by closing above 47,000 for the first time. The broader S&P 500 experienced an increase of 0.79%, while the Nasdaq rose by 1.15%. Fear gauge, the VIX, declined by 5%. Sentiment experienced an uplift following the release of the Consumer Price Index data for September, which indicated that annual inflation increased in September, albeit at a rate lower than anticipated.
This has heightened anticipations that the Federal Reserve will reduce interest rates in its forthcoming policy meetings next week and in December. Reductions in the Federal Reserve’s interest rates can lead to decreased savings and borrowing costs, which in turn may stimulate consumer spending and investment, thereby enhancing business operations and generating a persistent favorable environment for equity markets. Meanwhile, corporate earnings continue to impress market, with Ford shares rising 12% on Friday, marking their best day since 2020, following the automaker’s strong third-quarter earnings results.
“When the Fed is lowering rates and earnings are good, markets don’t go down very much,” stated Bob Doll. “This is the current situation we are facing. Earnings drive stocks, and earnings have been pretty good,” Doll added. The S&P 500 and Nasdaq recorded their most favorable weekly performance since the beginning of August, while the Dow recorded its strongest weekly performance since early July.
“With the Fed cutting rates — and this report does nothing to stop them from a [quarter-point] cut next week — and corporate profits continuing to increase, it’s hard to see an interruption of this year’s bull market,” stated Chris Zaccarelli. Next week, investors will focus on a series of corporate earnings reports from notable companies such as Microsoft and Apple. Additionally, the US-China trade relationship will be a focal point as President Donald Trump is anticipated to engage with Chinese leader Xi Jinping during the Asia-Pacific Economic Cooperation summit in South Korea.