Indexes notch fresh records amid economic optimism
U.S. stock markets closed out the week with strong gains, capping another record-setting streak. The S&P 500 rose 0.5% on Friday, while the Dow Jones Industrial Average added 0.4%. The Nasdaq composite led with a 0.7% increase. All three major indexes hit all-time highs for the second consecutive day.
Investors remained confident in the backdrop of expected interest rate cuts by the Federal Reserve. Strong corporate earnings and optimism about economic support helped sustain the rally across sectors.
Gold and housing markets react to policy outlook
Gold prices continued their sharp rally, fueled by expectations of lower interest rates and mounting concerns over inflation. The precious metal is also benefiting from fears that rising U.S. and global debt levels may undermine fiat currencies.
Meanwhile, homebuilder Lennar dropped 4.2% after reporting weaker-than-expected revenue, even though profits beat estimates. The company cited continued market pressure and the need to offer buyer incentives, which dragged down average sale prices. Lower interest rates could eventually revive housing demand, especially as mortgage rates decline in anticipation of Fed rate cuts.
Corporate earnings lift sentiment
FedEx shares climbed after delivering stronger-than-expected quarterly earnings. The company’s performance helped reinforce investor optimism about corporate resilience amid shifting economic conditions.
At the same time, Japanese stocks saw a decline following the Bank of Japan’s announcement that it would reduce its holdings of stock funds. The move contrasts with the more accommodative stance taken by the Federal Reserve.
Risks remain as markets bet on dovish Fed
Despite the market’s bullish tone, concerns linger about the sustainability of the rally. Stocks have surged quickly, leading to fears of overvaluation. If the Federal Reserve fails to deliver the anticipated rate cuts, markets could face a sharp correction.
Fed Chair Jerome Powell warned midweek that the central bank faces a precarious situation. Inflation remains stubbornly high, even as the job market weakens. Complicating the outlook, President Donald Trump’s tariffs are expected to temporarily elevate inflation further.
While more rate cuts appear likely this year and into next, Powell emphasized that the Fed must stay flexible in its approach, responding swiftly to evolving data.
