Wall Street Cheers Trade Hopes and Rate Cut Speculation as S&P 500, Nasdaq Hit All-Time Highs

The final trading day of the week saw a robust performance on Wall Street, with major indices closing significantly higher. Investors enthusiastically bought into the market, propelled by a potent combination of progress in U.S.-China trade negotiations and renewed expectations of an imminent interest rate reduction from the Federal Reserve. This optimistic climate pushed two of the three major U.S. stock indexes to their highest-ever closing levels.

The Dow Jones Industrial Average surged by 432.43 points, or 1.00%, to close at 43,819.27. Meanwhile, the S&P 500 added 32.05 points, or 0.52%, finishing the day at 6,173.07, marking a new all-time closing record. The tech-heavy Nasdaq Composite also achieved a historic close, gaining 105.55 points, or 0.52%, to reach 20,273.46. All three key U.S. stock indexes posted weekly gains, underscoring a positive sentiment across the board.

Among the 11 major sectors within the S&P 500, consumer discretionary stocks led the charge, demonstrating strong investor confidence in consumer-facing businesses. Conversely, energy shares lagged behind, indicating some cautiousness in that segment.

The Nasdaq's impressive ascent to a record close officially confirms its entry into a bull market, a milestone it reached when it rebounded from its post-"liberation day" low on April 8, as reported by Reuters. The blue-chip Dow, however, still has some ground to cover, remaining 2.7% below its own record closing high achieved on December 4.

The improved risk appetite among investors was largely attributed to a breakthrough in trade discussions between Washington and Beijing. A White House official confirmed that an agreement had been reached to expedite rare-earth shipments from China to the U.S. This development comes well ahead of the July 9 expiration of the 90-day postponement of President Donald Trump's "reciprocal" tariffs, offering a glimmer of hope for de-escalating trade tensions. Further bolstering this optimism, U.S. Treasury Secretary Scott Bessent indicated that the administration's trade deals with 18 key U.S. trading partners could be finalized by the September 1 Labor Day holiday.

On the New York Stock Exchange, advancing issues outpaced declining ones, with 347 new highs recorded against 55 new lows. However, on the Nasdaq, declining issues slightly outnumbered advancers by a ratio of 1.11-to-1, with 2,342 stocks falling compared to 2,111 rising.

Stocks in Focus: Tech Giants and Retailers Make Headlines

Several individual stocks made waves during Friday's trading session. Nvidia continued its upward trajectory, gaining 1.8% and moving closer to a staggering $4 trillion market capitalization. Amazon shares also rallied, climbing 2.85%. In contrast, Micron Technology saw a slight dip of 0.98%, and Tesla stock declined by 1.43%.

Nike was a standout performer, with its shares jumping an impressive 15.2% after the athletic apparel giant forecast a smaller-than-expected drop in first-quarter revenue, alleviating some investor concerns.

Economic Data Paints a Mixed Picture

Recent economic data provided a mixed bag for market watchers. U.S. consumer spending, a crucial indicator representing over two-thirds of economic activity, unexpectedly fell by 0.1% in May. This marks the second decline in consumer spending this year, following an unrevised 0.2% gain in April. Economists surveyed by Reuters had anticipated a slight increase of 0.1%.

Separately, a report from the University of Michigan confirmed an improvement in consumer sentiment this month, although it still remains significantly below the post-election surge experienced in December.

Despite the somewhat subdued consumer spending figures, financial markets are increasingly confident that the Federal Reserve will begin cutting interest rates soon. According to CME’s FedWatch tool, there's a 76% likelihood that the Fed will implement its first rate cut of the year in September, with a smaller, 19% probability of a rate cut occurring as early as July.