U.S. stock markets closed at record highs on Friday following the Fed rate cut last week and indications for further easing of policies. Some progress in U.S.-China trade talks also boosted investors’ sentiment. All three major stock indexes ended in positive territory on the day. For the week as a whole, these indexes finished in positive territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.4% or 172.85 points to close at 46,315.27, marking a new closing high for the index. Notably, 14 components of the 30-stock index ended in positive territory, 15 finished in negative territory and one remained unchanged. At the intraday high, the blue-chip index recorded a new all-time high of 46,396.47.
The tech-heavy Nasdaq Composite finished at 22,631.48, rising 0.7% or 160.75 points driven by the strong performance of technology bigwigs. At the intraday high, the tech-laden index recorded a new all-time high of 22,645.11.
The major gainer of the tech-laden index was AppLovin Corp. APP. The stock price of this AI-powered technology services giant surged 4.5%. AppLovin currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The S&P 500 advanced 0.5% to finish at 6,664.36. This marked the benchmark’s new closing high. Out of the 11 broad sectors of the broad-market index, six ended in positive territory, while five were in negative territory. The Technology Select Sector SPDR (XLK) gained 1% while the Energy Select Sector SPDR (XLE) fell 1.3%.
The fear gauge, the CBOE Volatility Index (VIX) was down 1.6% to 15.45. A total of 27.78 billion shares were traded on Friday, higher than the last 20-session average of 17.41 billion. Friday’s trading volume was the highest since early April. Decliners outnumbered advancers on the NYSE by a 1.43-to-1 ratio. On the Nasdaq, a 1.42-to-1 ratio favored declining issues.
Fed Rate Cut Boosts Confidence
On Sept. 17, the Fed in its FOMC meeting decided on a much-hyped 25-basis-point cut in the benchmark lending rate to reduce it to the range of 4-4.25%. This is the first interest rate cut of 2025. The decision was almost unilateral as 11 out of 12 Fed voting members favored a cut of a quarter percentage basis point in the Fed fund rate, while just a lone member dissented with a half a percentage point cut.
However, the Fed’s dot-plot has shown two more rate cuts of 25 basis points each this year and one rate cut of 25 basis points in both 2026 and 2027. A low-interest-rate regime will be beneficial for stock investing as it reduces the discount rate thereby increasing the net present value of equity investment. High-growth sectors such as technology, consumer discretionary and cryptocurrency will benefit the most.
Progress in TikTok Talk
CNBC reported that the U.S. President and Chinese leader Xi Jinping had a telephonic discussion on the Chinese app TikTok. The two sides made significant progress on the deal though they are yet to reach a final agreement.
Late on Friday, President Trump said, “TikTok deal is well on its way, as you know, and the investors are getting ready. We have to get it signed.” Trump posted on Social Truth, “I just completed a very productive call with President Xi of China. We made progress on many very important issues including Trade, Fentanyl, the need to bring the War between Russia and Ukraine to an end, and the approval of the TikTok Deal.”
Weekly Roundup
Last week was very impressive for Wall Street. The Dow, the S&P 500 and the Nasdaq Composite rose 1%, 1.2% and 2.2%. The Fed rate cut and indication of further easing of monetary policies strengthened market participants’ confidence in risky assets like equities.
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AppLovin Corporation (APP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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