- On Friday, the Dow Jones Industrial Average surged and stocks rose broadly amid growing expectations of a rate cut.
- New data showed consumer price growth slowed and producer price inflation edged down slightly.
- The Russell 2000 index of small-cap stocks rose for a second straight day, gaining more than 1% following a 4% gain on Thursday.
Stocks surged over the weekend, with the Dow Jones Industrial Average rising more than 200 points to close above 40,000 for the first time since mid-May.
Investors welcomed the broadening stock market rally in 2024, which has been largely concentrated in big tech stocks linked to the AI ​​industry.
Every sector in the S&P 500 rose on Friday, with 90% of the index’s constituents rising. Small-cap stocks also rose for a second straight day, with the Russell 2000 up 1% after surging 4% on Thursday.
The rise comes amid encouraging data paving the way for a rate cut in September. Market experts said on Friday that consumer prices rose less than expected last month, while wholesale prices rose, but only slightly and not enough to preclude a rate cut in the future.
According to the CME FedWatch tool, the market sees a nearly 90% chance that the Federal Reserve will cut interest rates at its September FOMC meeting.
The odds of a larger 50 basis point cut at the December meeting are also rising, with traders seeing a cut in the federal funds rate to 4.50%-4.75% as the most likely outcome at the final meeting of the year.
As of the close of trading at 4pm on Friday, US stock indexes were as follows:
Bond yields have fallen sharply as the market adjusts to the positive data and the new interest rate outlook. The interest-rate-sensitive two-year Treasury note has fallen about 14 basis points in a week, while the 10-year note has fallen more than eight basis points in the same period. The 10-year note fell to 4.182% on Friday.
As interest rate expectations strengthen, investors are seeing increased potential for gains in stocks that have been held back by the Fed’s tightening monetary policy, easing concerns about market concentration in tech giants such as Nvidia.
Here’s something else that happened today:
Commodities, Bonds and Cryptocurrencies:
- Oil futures fell. West Texas Intermediate crude fell 0.5% to $82.23 a barrel. The international benchmark Brent crude fell 0.4% to $85.07 a barrel.
- Gold fell to $2,418 per ounce.
- The yield on the 10-year Treasury note fell to 4.18%.
- Bitcoin rose 0.5% to trade at $57,836.
