The Dow rallied Friday to a fourth-straight weekly win, supported by upbeat quarterly earnings from corporates and data showing cooling inflation that boosted hopes for a sooner interest rate cut.
At 16:00 ET (20:00 GMT), Dow Jones Industrial Average rose 654 points, or 1.6%, S&P 500 rose 1.1%, and NASDAQ Composite rose 1.1%, with the latter two indexes posting two-straight weeks of loses for the first time since April.
Cooling inflation data puts September rate cut in play
The PCE price index, the U.S. Federal Reserve’s preferred inflation metric, rose 0.1% on a monthly basis in June and 2.5% annually, both as expected.
While the Federal Reserve‘s meeting next week is too soon for a rate cut, Macquarie says, the Fed is likely to stoke expectations for cuts to begin in September.
“We expect the FOMC to leave the fed funds rate unchanged next week, but for the communication to foreshadow rate cuts ahead,” Macquarie said.
Treasury yields fall on rate-cut hopes, boosting dip-buying in tech
Rate-cut optimism pushed Treasury yields lower, sparking a bid in tech stocks following their recent malaise.
The dip-buying action comes just ahead of further earnings from major tech names inclding Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) due on Tuesday and Thursday, respectively.
Microsoft’s results are likely to steal the spotlight as investors look for further clues that the tech giant’s cloud business Azure is capitalizing on the AI wave.
Beyodn AI, “capex trends and the return on Microsoft’s AI investments and Office growth, specifically when Copilot uplift can offset slowing seat growth,” will likely dominate investor attention, UBS said in a note.
Prints from Advanced Micro Devices (NASDAQ:AMD), Qualcomm Incorporated (NASDAQ:QCOM) and Amazon (NASDAQ:AMZN) are also due next week.
3M in record rally after impressive earnings; Bristol-Myers Squibb, Deckers also impress
3M Company (NYSE:MMM) stock soared nearly 23% to record highs after the industrial conglomerate raised the low end of its full-year adjusted profit forecast expecting to benefit from restructuring measures and increasing demand for electronics.
Bristol-Myers Squibb (NYSE:BMY) stock rose 11% after the drugmaker posted better-than-expected second-quarter results, driven by growth from new products like anemia treatment Reblozyl and heart drug Camzyos as well as from its top-seller, blood thinner Eliquis.
Deckers Outdoor (NYSE:DECK) stock rose more than 6% after the athletics shoes and apparel company raised its annual profit forecast following a first-quarter results beat.
On the flip side, DexCom (NASDAQ:DXCM) stock slumped 41% after the medical device maker cut its annual revenue forecast, saying it had fewer new customers than expected.
(Peter Nurse, Ambar Warrick contributed to this article.)