Nasdaq hits record, S&P 500 heads for winning week as Fed decision looms: Live updates
A trader works on the floor of the New York Stock Exchange on Aug. 4, 2022.
Source: NYSE
The Nasdaq Composite notched a new high on Friday as investors took signs of weakening jobs and tame inflation to mean the Federal Reserve will lower interest rates next week.
The tech-heavy Nasdaq rose 0.3% and had hit a fresh record, led by a jump in Tesla shares. The broad market S&P 500 hovered around the flatline, while the blue-chip Dow Jones Industrial Average lost 141 points, or 0.3%.
All three major averages closed at record levels Thursday, with the Dow closing above 46,000 for the first time, and each are on pace for a winning week. In fact, the S&P 500 is on pace for its best weekly performance since early August and its fifth positive week in six, and the Nasdaq is on track for its second winning week in a row. The Dow is also poised to post its first positive week in three.
Investors are now gearing up for the Fed’s decision on whether it will lower its benchmark interest rate on Sept. 17. Futures markets are pricing in a quarter percentage point cut with near certainty, according to the CME FedWatch tool.
The economic data released this week would support such a decision, according to Bill Northey, investment director at U.S. Bank Wealth Management. On Thursday, the consumer price index showed a hotter-than-expected month-to-month increase. However, the usually crucial inflation report was overshadowed by weekly jobless claims, which showed a surprise jump to the highest level since October 2021.
Those reports as well as the downward revisions on job growth from the Bureau of Labor Statistics earlier this week further confirms a “decelerating labor market” and that inflation “remains well contained,” which “really sets up for a cut next week,” Northey told CNBC.
“This is a Fed that is reluctant to surprise markets, and so as expectations have cemented around that 25 basis point rate cut, we think that they’ll deliver against that,” he said. “This should be a very information-rich meeting that we see the middle of next week.”
