NEW YORK (AP) โ Wall Street hovered near all-time highs on Friday and was on track to close its longest weekly winning streak in six years.
The S&P 500 was down 0.1% in morning trading and is within 1.7% of its all-time high set early last year. He is still headed for a seventh straight week of wins.
The Dow Jones Industrial Average, which shows the health of a smaller portion of the U.S. stock market, fell 66 points, or 0.2%, a day after setting a record for the second consecutive time. The Nasdaq Composite rose 0.3% as of 10 a.m. ET.
The company behind Olive Garden, Ruth's Chris Steak House and other restaurant chains sank 2.2% despite reporting stronger fourth-quarter earnings than analysts expected. Darden Restaurants gave a full fiscal year revenue forecast that missed analysts' forecasts.
A 3.5% gain for Costco helped offset that weakness. It rose after reporting stronger results for the latest quarter than analysts expected and saying it will send $6.7 billion in cash to its shareholders through a $15 special dividend.
Stocks overall have soared this week after the Federal Reserve appeared to give a thumbs up to the hopes that have sent Wall Street soaring since the fall. 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 not only pause its interest rate hikes that hurt the market, but consider cutting them.
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 stabilized a bit on Friday, falling to 3.91% from 3.92% late Thursday. It was 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 high 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 very 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 lower interest rates that encourage businesses and individuals to spend.
"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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AP Business Writer Elaine Kurtenbach contributed.
