The S&P 500 rose 1.2% on Friday, closing just 0.6% below its July 16th record high of 5,667.20 points. The Dow Jones climbed 1.1%, and the Nasdaq Composite increased by 1.5%.
The surge followed a dovish speech by Fed Chair Jerome Powell, who hinted strongly at upcoming rate cuts, even leaving the door open for a double cut. This sent bond yields lower, with the 10-year Treasury down 6 basis points to 3.8%, and the 2-year down 10 basis points to 3.91%.
Interest rate-sensitive sectors like real estate and consumer cyclicals led gains, with tech giants Nvidia and Tesla both rising 4.6%. Despite the overall positive mood, Meta dropped 0.7% amid reports that it scrapped plans for a premium mixed-reality headset. Intuit also fell 6.8% after missing earnings expectations, while Workday surged 12% on strong quarterly results.
The market is increasingly pricing in a 50-basis-point rate cut in September. Economist Paul McCulley told CNBC that weak job numbers in early September could prompt the Fed to act more aggressively. However, a double cut might also signal an impending recession if the labor market continues to weaken.
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