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U.S. stocks advanced on Friday as debate continues over whether the Federal Reserve will begin rate cuts with a large half-percentage point reduction next week.
The increased odds of a 50 basis point rate cut were rounding out a volatile backdrop. Trading week for stocks. The Nasdaq Composite (COMP:IND) was on track for a ~6% weekly increase, gaining along with other key Wall Street averages.
On Friday afternoon, the Nasdaq Composite (COMP:IND) +0.5%the S&P 500 (SP500) +0.5%and the Dow was (DJI) +0.8%The S&P and Nasdaq were on track for their fifth straight win.
All 11 S&P 500 sectors posted gains, led by a 1% rise in the materials sector. The real estate sector posted the smallest gain.
By early Friday, the probability of a 50 basis point cut had soared to nearly 50% after The Wall Street Journal On Thursday, policymakers were reported to be still deciding the size of a rate cut for their meeting that ends on Wednesday.
Former New York Federal Reserve President William Dudley was reported to have said on Friday that there was a “strong” case for a half-point rate cut next Wednesday, with a weakening labor market a key risk.
“We continue to believe the Fed will cut 25 basis points in September, probably another 25 basis points in November and potentially another 25 basis points in December,” said Eugenio Alemán, chief economist at Raymond James. He said in a comment Friday. “Our argument is consistent with what we see in the economy, as employment continues to slow and inflation continues to approach the 2.0% target rate.”
Inflation expectations for next year in the University of Michigan's Consumer Confidence Index report released Friday fell for a fourth straight month, to 2.7% from 2.8%. Consumer confidence rose to 69.0 in September, the highest reading since May.
In the fixed-income market, the yield on 10-year Treasury bonds (US10Y) fell 2 basis points to 3.65%. The yield on 2-year bonds (US2Y) fell 6 basis points to 3.58%.
Back in equities, Arm Holdings (ARM) +5.8% after Raymond James initiated coverage of the British chip design company with an Outperform rating and a $160 price target.
Boeing (BA) -3% as its workers voted overwhelmingly to reject a proposed labor contract and prepared to strike, with a work stoppage set to begin at midnight.
Adobe (ADBE) -9% Fourth-quarter guidance missed market expectations. Software maker Photoshop's revenue and earnings per share in the third quarter beat consensus estimates.
Major U.S. stock market averages closed higher on Thursday, overcoming volatility that followed wholesale prices rising above expectations.
