In a strong finish to the week, Wall Street celebrated as the Dow Jones Industrial Average closed at a new all-time high on Friday, bolstered by promising U.S. economic data that reinforced hopes for a modest interest rate cut by the Federal Reserve in September.
The rally was led by significant gains in heavyweight stocks such as Tesla and Amazon, both of which soared over 3% in response to the positive economic indicators. The optimism was fueled by robust consumer spending in July, which pointed to a resilient economy with moderate inflation—a scenario often referred to as a “Goldilocks” economy, where growth is steady but not so strong as to trigger runaway inflation.
Cameron Dawson, Chief Investment Officer at Newedge Wealth, remarked, “Investors are seeing another sign of being in a soft landing. It’s another one of those Goldilocks kind of reports really threading a needle right down the center. The market is really getting exactly what it wanted.”
Tech stocks were particularly buoyant, with chipmakers Broadcom and Marvell Technology posting impressive gains of nearly 4% and 9%, respectively, after Marvell projected quarterly results that exceeded expectations. Nvidia, another tech giant, rose 1.5%, recovering from a sharp decline the previous day.
The positive market sentiment was further bolstered by the release of the personal consumption expenditures report, which came just after Fed Chair Jerome Powell indicated that a policy adjustment was imminent. According to the CME Group’s FedWatch Tool, traders are now largely expecting a 25 basis point rate cut in September, with the likelihood of a more aggressive 50 basis point cut diminishing after Friday’s data.
As Wall Street heads into the Labor Day weekend, trading volume was slightly below average, with 11.2 billion shares changing hands, compared to the 11.4 billion daily average over the past 20 sessions.
The major indexes closed the day with solid gains: the S&P 500 climbed 1.01% to 5,648.40 points, the Nasdaq Composite Index rose 1.13% to 17,713.62 points, and the Dow Jones Industrial Average increased by 0.55% to a record 41,563.08 points. All 11 S&P 500 sectors advanced, with consumer discretionary and industrials leading the way.
For the month, the S&P 500 rose 2.3%, the Dow added 1.8%, and the Nasdaq gained 0.6%, reflecting a strong rebound after early August’s fears of a potential recession due to a cooling labor market.
In other market news, Novavax saw an 8.6% surge following the FDA’s emergency use authorization for an updated COVID-19 vaccine, while Ulta Beauty dropped 4% after lowering its annual forecasts due to slowing demand for luxury cosmetics. Intel’s stock jumped nearly 10% amid reports of a potential merger, and Dell Technologies advanced 4.3% on the back of revised positive revenue and profit forecasts.
Despite the overall positive tone, shares of Trump Media & Technology Group dipped 1.7% to a record low, bringing its market value down to $3.9 billion.
As Wall Street gears up for the release of the Labor Department’s August jobs report next week, investors are cautiously optimistic that the Fed’s anticipated rate cut could further fuel the market’s upward momentum.