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US stocks were mostly lower Friday, though the Dow eked out a gain to shut at a record high.
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The Federal Reserve’s first rate of interest cut since 2020 helped drive the week’s gains.
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Investors see the Fed’s easing as a positive sign for the economy and the stock market.
US stocks closed mostly lower on Friday, but finished the week higher by just over 1% for the S&P 500, Nasdaq 100, and Dow Jones Industrial Average.
The Dow edged barely higher in Friday’s session to clinch one other record near cap off the week.
The anticipation and delivery of the Federal Reserve’s first rate of interest cut since 2020 helped drive the gains this week.
The Fed issued a jumbo 50 basis point rate of interest cut to “recalibrate” monetary policy, as Fed Chairman Jerome Powell put it nine times during his FOMC speech on Wednesday.
Investors took the move as assurance that the US economy is on course for a soft landing, as inflation continues to relax and the labor market normalizes.
US stocks soared on Thursday after declining barely on Wednesday, as investors had more time to digest the Fed’s rate of interest decision.
Going forward, there should be more gains in store for the stock market, in step with Raymond James CIO Larry Adam.
“The combo of Fed easing, and a soft landing should prove to be a tailwind for risk assets (equities particularly). Historically, Fed easing cycles have been positive for the equity market. Actually, the S&P 500 has been up ~5% on average throughout the 12 months following the Fed’s first cut,” Adam said in a note on Friday.
The S&P 500 and Dow Jones Industrial Average each hit record highs on Thursday. But those record highs could turn into a liability if the economy weakens, in step with Adam.
“With the S&P 500 rallying to record levels and currently at a variety of the costliest valuations (23.5 LTM P/E) that now we’ve seen in history, there won’t be much room for disappointment if the soft-landing scenario were to falter,” Adam said.
Here’s where US indexes stood on the 4:00 p.m. closing bell on Friday:
Here’s what else happened today:
In commodities, bonds, and crypto:
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West Texas Intermediate crude oil decreased 0.10% to $71.09 a barrel. Brent crude, the international benchmark, dropped 0.39% to $74.59 a barrel.
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Gold was up 1.17% to $2,645.30 an oz.
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The ten-year Treasury yield was higher by 2 basis points at 3.733%.
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Bitcoin was down 0.11% to $62,894.
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