NEW YORK (AP) — U.S. stocks are rallying in near unison on Friday as they close out a bumpy week that had been dominated by sharp, market-cleaving swings.
The S&P 500 was 1.3% higher in afternoon trading following stronger-than-expected profit reports from 3M and several other big companies. The Dow Jones Industrial Average was up 746 points, or 1.9%, as of 12:13 p.m. Eastern time, and the Nasdaq composite was 1.1% higher.
The market’s gains were widespread, including both Big Tech behemoths and smaller stocks. That’s a departure from much of the week, where a divide deepened between the handful of elite stocks that had dominated the market earlier this year and almost everyone else.
Nvidia rose 0.6% to cut into what had been a 4.8% loss for the week. Most of the other members of the small group of stocks known as the “Magnificent Seven” also rose to claw back some of their losses from earlier in the week.
They were under pressure after the latest profit results from Tesla and Alphabet raised worries that investors had gotten carried away by the frenzy around artificial-intelligence technology and taken Magnificent Seven prices too high.
As those old leaders of the market’s leaderboard tumbled, formerly downtrodden areas of the market turned higher, and they continued their momentum Friday. The Russell 2000 index of smaller stocks climbed 1.4%. It’s up more than 10% this month, far better than the slight dip for the big stocks in the S&P 500.
Industrial companies and other businesses whose profits are closely tied to the strength of the economy also rallied. They had lagged this year as high interest weighed on the U.S. economy and slowed its growth.
Norfolk Southern jumped 12.1% to erase what had been a loss for the year so far after the rail company reported better profit for the latest quarter than analysts expected. It got a boost from insurance payments related to last year’s disastrous East Palestine derailment. The company also made progress in reducing its expenses and improving efficiency.
3M rose 19.1% after reporting stronger profit and revenue for the latest quarter than analysts expected. The company behind the Scotch-Brite and Nexcare brands also raised the bottom end of its forecasted range for profit for the full year of 2024.
Stocks generally got another boost from the latest update on inflation, which investors saw as further evidence their expectations for coming cuts to interest rates will prove true.
U.S. consumers paid prices in June that were 2.5% higher than a year earlier, down from May’s inflation rate of 2.6%, the Commerce Department said on Friday. That’s according to the personal consumption expenditures index, which the Federal Reserve pays more attention to than the consumer price index, or CPI.
With inflation resuming its slowdown following a discouraging start to the year, traders are continuing to bet on a 100% probability that the Fed will begin easing its main interest rate in September, according to data from CME Group. The Fed has been keeping its federal funds rate at the highest level in more than two decades for roughly a year.
“Income growth is slow, spending growth is moderating, goods prices are in deflation, service price inflation is tame,” according to Brian Jacobsen, chief economist at Annex Wealth Management. “If this doesn’t give the Fed confidence to cut, nothing will.”
The yield on the 10-year Treasury fell to 4.20% following the inflation report from 4.25% late Thursday and from 4.70% in April. That’s a significant move for the bond market and offers support for stock prices.
Among the other winners on Wall Street, where nearly 90% of the stocks in the S&P 500 were rising, Deckers Outdoors climbed 7.1% after it breezed past Wall Street’s earnings expectations on the strength of its Ugg and Hoka brand footwear. The California company also raised its full-year profit forecast.
Newell Brands soared 39.6% after the owner of Coleman camping supplies and Sharpie markers easily topped analysts’ profit targets.
Among the relatively few stocks to drop was DexCom, which tumbled 40.8%. The diabetes care company reported stronger profit for the latest quarter than expected, but its revenue fell short of analysts’ expectations. So did its forecast for revenue in the current quarter.
In stock markets abroad, stock indexes were higher across much of Europe and Asia. Japan’s Nikkei 225 was an outlier and slipped 0.5% amid expectations the Bank of Japan may raise interest rates at a policy meeting next week.
The Federal Reserve cut its key interest rate Wednesday for a second time this year as it seeks to shore up economic growth and hiring even as inflation stays elevated. The move comes amid a fraught time for the central bank, with hiring sluggish and yet inflation stuck above the Fed’s 2% target. Compounding its challenges, the central bank is navigating without much of the economic data it typically relies on from the government. The Fed has signaled it may reduce its key rate again in December but the data drought raises the uncertainty around its next moves. Fed Chair Jerome Powell told reporters that there were “strongly differing views” at the central bank's policy meeting about to proceed going forward.
The Federal Reserve will almost certainly cut its key interest rate on Wednesday and could signal it expects another cut in December as the central bank seeks to bolster hiring. A cut Wednesday would be the second this year and could benefit consumers by bringing down borrowing costs for mortgages and auto loans. Since Fed chair Jerome Powell strongly signaled in late August that rate cuts were likely this year, the average 30-year mortgage rate has fallen to about 6.2% from 6.6%. Still, the Fed is navigating an unusual period for the U.S. economy and its future moves are harder to anticipate than is typically the case.
Stocks are rallying toward more records ahead of a week packed with potentially market-moving events. The S&P 500 rose 1% Monday. The Dow Jones Industrial Average added 224 points, and the Nasdaq composite jumped 1.7%. Stocks also climbed in Asia ahead of a meeting on Thursday between the heads of the United States and China. The hope is that the talks could clear rising tensions between the world’s two largest economies. This upcoming week will feature profit reports from some of Wall Street's most influential companies and a meeting by the Federal Reserve on interest rates. Gold fell back toward $4,000 per ounce.
U.S. and Chinese officials say a trade deal between the world’s two largest economies is drawing closer. The sides have reached an initial consensus for President Donald Trump and Chinese leader Xi Jinping to aim to finalize during their high-stakes meeting Thursday in South Korea. Any agreement would be a relief to international markets. Trump's treasury secretary says discussions with China yielded preliminary agreements to stop the precursor chemicals for fentanyl from coming into the United States. Scott Bessent also says Beijing would make “substantial” purchases of soybean and other agricultural products while putting off export controls on rare earth elements needed for advanced technologies.
Some seniors say the Social Security Administration's cost-of-living adjustment won’t help much in their ability to pay for their daily expenses. The agency announced Friday the annual cost-of-living adjustment will go up by 2.8% in 2026, translating to an average increase of more than $56 for retirees every month. Eighty-year-old Florence, South Carolina, resident Linda Deas says it does not match the current "affordability crisis.” The benefits increase will go into effect for Social Security recipients beginning in January. Friday’s announcement was meant to be made last week but was delayed because of the federal government shutdown. Recipients got a 2.5% COLA boost in 2025 and a 3.2% increase in 2024.
Wall Street is heading for records after an update said U.S. households are feeling a bit less pain from inflation than feared. The S&P 500 climbed 1% Friday and was on track to top its all-time high set earlier this month. The Dow Jones Industrial Average jumped 529 points, and the Nasdaq composite rose 1.3%. Both are also heading toward records. The inflation data could clear the way for the Federal Reserve to keep cutting interest rates in hopes of helping the slowing job market. A strong earnings reports from Ford Motor and continued gains for AI stars also drove stocks higher.
Federal Reserve Chair Jerome Powell says that a sharp slowdown in hiring poses a growing risk to the U.S. economy.
Three researchers who probed the process of business innovation have won the Nobel memorial prize in economics for explaining how new products and inventions promote economic growth and human welfare, even as they leave older companies in the dust.
U.S. stocks are rising and recovering some of their sell-off from Friday. The S&P 500 climbed 1.6%.
President Donald Trump says “there seems to be no reason” to meet with Chinese leader Xi Jinping as part of an upcoming trip to South Korea after China restricted exports of rare earths needed for American industry. The Republican president suggested Friday he was looking at a “massive increase” of import taxes on Chinese products in response to Xi’s moves. Trump says one of the policies the U.S. is calculating is "a massive increase of Tariffs on Chinese products coming into the United States." A monthslong calm on Wall Street was shattered, with U.S. stocks falling on the news. The Chinese Embassy in Washington hasn't responded to an Associated Press request for comment.
