NEW YORK โ Wall Street endured mixed trading on Friday to bring a quiet end to another hectic week.
The S&P 500 finished almost unchanged for the day, down 0.36, or less than 0.1%, at 4,719.19. But he still remains within 1.6% of his all-time high set early last year, and closed out a seventh straight week of wins, his longest streak in six years.
The Dow Jones Industrial Average, which tracks a smaller portion of the U.S. stock market, rose 56.81 points, or 0.2%, to 37,305.16 and set a record for the third day in a row. The Nasdaq Composite rose 52.36, or 0.4%, to 14,813.92.
Costco helped lead the market with a 4.4% gain. It reported stronger results for the latest quarter than analysts expected and said it will send $6.7 billion in cash to its shareholders through a $15 special dividend. That helped offset a 3.6% decline for Lennar. The homebuilder reported higher profits for the latest quarter, but also gave a forecast for a measure of profitability in the current quarter that fell short of analysts' expectations.
Overall, stocks rose this week after the Federal Reserve seemed to give a nod to the hopes that have sent Wall Street soaring since Halloween. Fed Chair Jerome Powell, at a news conference Wednesday, did not forcefully reject traders' expectations that inflation has cooled enough for the central bank to move on to cutting interest rates after raising them. dramatically since early last year.
The S&P 500 has risen about 15% since late October on growing hopes for that turnaround. Lower rates not only give a boost to the prices of all types of investments, but also relieve pressure on the economy and the financial system.
Hopes of several rate cuts by the Federal Reserve in 2024 have sent Treasury yields tumbling in the bond market, which in turn releases pressure on the stock market.
The 10-year yield fell again on Friday. It fell to 3.91% from 3.92% late Thursday. It had been above 5% in October and at its highest level since 2007.
With inflation below its peak, Bank of America forecasts 152 rate cuts by central banks around the world in 2024. That would be the first year since 2020 that cuts have exceeded hikes.
Of course, some more cautious investors say the markets have gotten ahead of themselves. Big measures appear to depend on the Federal Reserve carrying out what not long ago was considered a nearly impossible task.
The Federal Reserve's goal has been to slow the economy and reduce investment prices enough through high interest rates to control inflation. Then you have to release the brakes at exactly the right moment. If you wait too long, the economy could fall into a painful recession. If you act too soon, inflation could accelerate again and add misery for everyone.
There are a lot of "yeses". Additionally, many critics say the number of rate cuts traders expect in 2024 does not seem likely unless the U.S. economy falls into a recession.
With the huge rallies recorded so far, โmarkets are betting on the infallible Federal Reserve,โ wrote strategist Michael Hartnett in a BofA Global Research report.
Those rallies may also be threatening the futures investors rely on.
Lower Treasury yields and higher stock prices can encourage businesses and households to spend more, which keeps the economy strong but can add upward pressure on inflation.
A preliminary report on Friday indicated that growth in U.S. business activity may be picking up. He cited โmore flexible financial conditions,โ which is another way of describing market movements that could encourage businesses and individuals to spend more.
"Looser financial conditions have helped boost demand, business activity and employment in the services sector, and have also helped raise expectations for future output," said Chris Williamson, chief business economist at S&P Global Market. Intelligence.
Williamson also said that a measure of inflation pressure "remains sticky, but at a level that is indicative" that consumer-level inflation is only modestly above 2%. The Federal Reserve's goal is to keep inflation at about 2% while maximizing the labor market.
In overseas stock markets, Hong Kong's Hang Seng Index rose 2.4%, and shares of property developers rose after some Chinese cities eased purchasing restrictions.
Hong Kong's market has been one of the worst in the world this year due to concerns about property developers and the overall health of the Chinese economy.
Most other markets around the world have been strong in 2023 amid hopes of cooling inflation and anticipation of interest rate cuts.
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