Stock market today: S&P 500 near all-time highs after strong week

The S&P 500 rose 0.2 percent for a seventh straight gain and retreated 2 percent from a record high set last month. The Dow Jones Industrial Average gained 96 points, or 0.2 percent, and the Nasdaq Composite added 0.2 percent.

For the week, the S&P 500 added nearly 3.9%, its best level since November 2023. The Nasdaq gained 5.2% and the Dow rose 2.9%.

Treasury yields fell in the bond market following mixed reports on the US economy. One showed that homebuilders started fewer projects last month than forecast, throwing some cold water on the market. Optimism rose earlier in the week after a series of better-than-expected reports on everything from inflation to sales to US retailers.

But a report later in the morning suggested that US consumers are feeling better about the economy than expected. It’s a big problem for Wall Street because their spending is the biggest part of the economy.

Relatively calm trading on Friday capped a manic week in which strong economic data helped Wall Street right after a scary run. The S&P 500 briefly fell nearly 10 percent below its record high last week as stocks were felt globally by a range of concerns. Many of these questions still hang over the market, just not as precariously as before.

One concern centered on the strength of the US economy following a surprisingly weak jobs report last month.

Even though confidence in the economy’s strength has risen following this week’s strong series of reports, it is likely to slow under the weight of high interest rates. That’s by design. The Federal Reserve’s goal was to try to cool what was a hot labor market by making it more expensive for businesses and households to borrow and spend. The Fed did this to remove upward pressure on inflation, which peaked at over 9% two summers ago.

The question is whether the economic slowdown will overshoot and become a recession. That is yet to be determined, but the hope on Wall Street is that an expected rate cut at the Fed’s next meeting in September will help prevent that from happening.

The market’s focus will turn to Jackson Hole, Wyoming next week. There, Federal Reserve Chairman Jerome Powell will give a speech at the end of the week, and the setting has played host to big policy announcements in the past.

Because the Fed has said its future moves will largely depend on what reports say at the time, “it will be difficult for Powell to pre-commit to a particular trajectory at Jackson Hole,” said Deutsche Bank economists led by by Matthew. Luzzetti.

But Powell could offer clues as to whether the Fed is only hoping to remove the brakes on the economy through rate cuts or give it an accelerator.

A second big concern for the market centered on whether investors caught the prices of Nvidia and other highly influential Big Tech stocks in their frenzy around artificial intelligence technology.

This debate is still ongoing. In just one hour Friday morning, Nvidia went from the top weight on the S&P 500 to the strongest force lifting the index. It reversed from an early 1.4% decline to finish up 1.4%.

Such swings have become typical for the stock that has become the face of the AI ​​craze. After rising more than 170% in the first six and a half months of the year, Nvidia has fallen more than 20% in the last three weeks.

A third factor that caused the big swings in global markets is more technical, one triggered by an interest rate hike by the Bank of Japan. This forced hedge funds around the world to abandon a popular trade en masse in which they had borrowed Japanese yen at cheap rates to invest elsewhere.

The ensuing forced and sudden sell-off rocked markets around the world, but calmed after a top Bank of Japan official said it would not raise interest rates further as long as markets were volatile. Analysts, however, say more potential sales may still be allowed to develop in the system.

On Wall Street, H&R Block jumped 12.1 percent for one of the market’s biggest gains after reporting a bigger-than-expected profit for the latest quarter. It also raised its dividend by 17% and announced a share buyback program of up to $1.5 billion.

Overall, the S&P 500 rose 11.03 points to 5,554.25. The Dow gained 96.70 to 40,659.76 and the Nasdaq composite added 37.22 to 17,631.72.

In the bond market, the yield on the 10-year Treasury fell to 3.88 percent from 3.92 percent late Thursday. The two-year yield, which more closely tracks expectations for Fed action, fell to 4.05 percent from 4.10 percent late Thursday.

In overseas stock markets, Japan’s Nikkei 225 rose 3.6 percent to cap its best week in more than four years. It was a strong rebound from its sharp losses the previous week, which included the worst day for the Japanese stock market since the black moon crash of 1987.

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