- US stocks were mostly lower Friday, though the Dow eked out a gain to close at a record high.
- The Federal Reserve's first interest rate cut since 2020 helped drive the week's gains.
- 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 slightly higher in Friday's session to clinch another record close to cap off the week.
The anticipation and delivery of the Federal Reserve's first interest rate cut since 2020 helped drive the gains this week.
The Fed issued a jumbo 50 basis point interest rate 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 track for a soft landing, as inflation continues to cool and the labor market normalizes.
US stocks soared on Thursday after declining slightly on Wednesday, as investors had more time to digest the Fed's interest rate decision.
Going forward, there should be more gains in store for the stock market, according to Raymond James CIO Larry Adam.
"The combination of Fed easing, and a soft landing should prove to be a tailwind for risk assets (equities in particular). Historically, Fed easing cycles have been positive for the equity market. In fact, the S&P 500 has been up ~5% on average in 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 both hit record highs on Thursday. But those record highs could become a liability if the economy weakens, according to Adam.
"With the S&P 500 rallying to record levels and currently at some of the most expensive valuations (23.5 LTM P/E) that we have seen in history, there is not much room for disappointment if the soft-landing scenario were to falter," Adam said.
Here's where US indexes stood at the 4:00 p.m. closing bell on Friday:
- S&P 500: 5,702.63, down 0.19%
- Dow Jones Industrial Average: 42,061.85, up 0.09% (+36.66 points)
- Nasdaq composite: 17,948.32, down 0.36%
Here's what else happened today:
- Trump Media stock plunged to a record low as the lockup period for insiders expires, giving them clearance to sell shares.
- Home Depot and Lowe's are already seeing the benefits from the Fed's first interest rate cut.
- The Federal Reserve is following its 1995 playbook, which is great news for both the stock market and the economy.
- Sanctioned tankers are back to transporting Russian oil in a blow to the West's efforts to restrict crude flows.
- Investors should buy bonds and gold as post-rate cut bubble risks remain, according to Bank of America.
- A bear and a bull on Wall Street offered differing opinions as to where stocks go over the next three months: either 12% lower or 7% higher.
In commodities, bonds, and crypto:
- 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.
- Gold was up 1.17% to $2,645.30 an ounce.
- The 10-year Treasury yield was higher by 2 basis points at 3.733%.
- Bitcoin was down 0.11% to $62,894.