Market Strategy

U.S. stocks climbed on Friday after Federal Reserve Chair Jerome Powell hinted that interest rate cuts are on the horizon. The Dow Jones Industrial Average rose by 462.30 points, or 1.14%, reaching 41,175.08. The Nasdaq Composite saw a 1.47% increase, closing at 17,877.79, while the S&P 500 gained 1.15%, ending the day at 5,634.61—just shy of the all-time highs reached last month.

Investors anticipate comments from Federal Reserve Chairman Jerome Powell and other central bank officials after positive economic data last week. Presidential candidate Kamala Harris will speak at the Democratic National Convention on Thursday.

This week will bring fresh data on inflation, the housing market, and retail sales after a volatile week for markets amid worries about the health of the economy. A handful of Federal Reserve speakers will also give remarks during the week, potentially offering more insights.

After a weaker-than-expected jobs report rattled markets last week, and the manufacturing sector contracted more than anticipated last month, investors will get fresh data on the services sector, consumer credit levels, and more this week.

It will be a busy week for markets with big events in monetary policy and earnings from more than half of the Magnificent Seven companies. The Federal Reserve will announce its latest decision on interest rates this Wednesday, which will be followed by comments from Chair Jerome Powell.

U.S. stocks ended Friday trading in the red as Wall Street concluded a week characterized by a shift from this year’s megacap winners to smaller names. The S&P 500 fell by 0.71%, closing at 5,505.00. The Nasdaq Composite dropped 0.81%, ending at 17,726.94. The Dow Jones Industrial Average decreased by 377.49 points, or 0.93%, to 40,287.53.

This week, the focus will shift to the earnings season, as economic data and central banker speeches will be relatively light. Nevertheless, market participants will keep an eye on economic reports for insights into the Federal Reserve’s future policy decisions.

The S&P 500 rose to a new high on Friday, achieving a record close as the latest jobs report fueled hopes for Federal Reserve rate cuts.

Although the Independence Day holiday on Thursday shortens the trading week, the Friday release of the U.S. jobs report gives investors significant data to close the week. Before that, Federal Reserve Chair Jerome Powell will make comments at an international conference, followed by the release of the minutes from the Fed’s June meeting. 

The S&P 500 dipped on Friday as shares of market darling Nvidia (NASDAQ:NVDA) fell for the second consecutive day. The broad market index declined by 0.16%, closing at 5,464.62, while the Nasdaq Composite dropped 0.18% to 17,689.36. The Dow Jones Industrial Average inched up 15.57 points, or 0.04%, to end at 39,150.33.

In a holiday-shortened week, investors will be watching comments from Federal Reserve representatives and data from several economic releases that could help show whether inflation is likely to continue its downward path.  Markets are closed on Wednesday for the Juneteenth national holiday.

The Federal Reserve’s meeting this week likely won’t result in a change in interest rates, but it is likely to show where the central bank is heading, as investors will digest projections data, along with comments from Chair Jerome Powell. Market watchers also will be tuned in to the Consumer Price Index (CPI) report for indications on whether price pressures continue to ease.