Inside Wall Street’s Crystal Ball – Wall Street ends the best week of the year quietly
Following a reality check from the U.S. Federal Reserve this week, reinforced expectations of three interest rate cuts by year's end fueled bullish sentiment on Wall Street. The S&P 500 index recorded its largest weekly percentage gain of 2024.
Despite two months of persistent inflation data, traders on Wall Street are likely celebrating as they close out one of the strongest weeks of the year for markets.
The Fed's decision to maintain steady rates on Wednesday, coupled with the suggestion of three potential rate cuts this year if inflation moderates, has eased concerns on Wall Street.
Markets anticipate rate cuts to begin in June, likely starting with a 25-basis point reduction, aiming to ease pressure on the economy and financial system.
At the New York Stock Exchange (NYSE) close, the Dow Jones Industrial Average fell -305.47 points, or -0.77%, to settle at 39,475.90. Despite the drop, the blue-chip index recorded its best week since December.
Investors remained hopeful that the index would surpass 40,000 during regular trading, although it achieved this twice in premarket trading without success during regular hours.
The broad-based Standard & Poor's 500 Index lost -7.35 points, or -0.14%, to 5,234.18, while the tech-heavy Nasdaq Composite Index climbed +26.98 points, or +0.16%, to 16,428.82.
The S&P 500 posted a +2.3% gain for the week, marking its largest weekly percentage advance since mid-December.
The blue-chip Dow surged +2%, registering its most significant weekly gain since mid-December, while the Nasdaq climbed +2.9%, marking its largest weekly percentage jump since mid-January.
A.I. stock surge led to two new record highs in major indexes this week, accompanied by the Fed's projection of three interest rate cuts for the U.S. economy by year-end.
In corporate news, performance wear companies had a tough day, especially with Lululemon Athletica dropping -15.8% despite beating profit expectations.
Additionally, Nike's -6.9% decline weighed on the market despite robust quarterly results, while Reddit declined -8.8% following its dynamic debut on the U.S. stock market.
FedEx surged +7.4% after reporting stronger-than-expected profits despite facing challenges in the demand environment, providing support to Wall Street.
Investors also greenlit a deal on Friday to take Trump Media, the owner of Truth Social, public after shareholders' approval marks a significant step for the delayed merger, promising a substantial financial gain for former President Donald Trump.
A majority of Digital World Acquisition Corp. shareholders approved the merger with Trump Media, but the stock sank -13.7% on Friday, suggesting not all shareholders were in favour.
In the U.S. government bond markets, the yield on the 10-year Treasury, which helps set rates for mortgages and other economy-dictating loans, finished at 4.20%, while the policy-sensitive two-year yield, which tends to reflect the market expectations of future moves by the Fed, closed at 4.59%.
Meanwhile, Bitcoin ETFs had their toughest week since the beginning of the year, with losses recorded four out of five days.
Bitcoin, the leading cryptocurrency by market cap, was trading at US$64,500 at press time, down from around US$73,000 about a week ago. It traded within an intraday range of US$62,328.00 to US$66,633.00.
Similarly, Ethereum, the second-largest blockchain by cryptocurrency market capitalization, traded within a daily range of US$3,254.00 to US$3,541.32 before closing at US$3,334.00.
Precious metals were weaker, with spot gold closing at $2,165.00 per ounce and silver at $24.64.
Energy market prices remained weak, with the global benchmark Brent crude oil at $85.56 per barrel, while the U.S. benchmark West Texas Intermediate settled at $80.64.
The U.S. Dollar Index (U.S. DXY), gauging the greenback's strength against six major foreign currencies in the forex market, rebounded and extended to 104.40.
Meanwhile, the Eurodollar was 1.0808, and the British pound finished at 1.2598. The Japanese yen ended at 151.42, while the Australian dollar was at 0.6514.
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