A rally swept Wall Street on Friday, lifting a wide range of stocks to close a tumultuous week. The S&P 500 jumped 1.1%, the Dow Jones Industrial Average soared 654 points, and the Nasdaq composite climbed 1%. The rally included both Big Tech behemoths and smaller stocks, marking a departure from recent trading where a divide deepened between elite stocks and others. Nvidia and other stocks in the “Magnificent Seven” group also climbed after facing pressure earlier in the week.
Previously downtrodden areas of the market turned higher as Big Tech stocks tumbled, creating momentum that continued on Friday. The Russell 2000 index of smaller stocks surged 1.7%, outperforming big stocks in the S&P 500. Industrial companies and businesses tied to the economy’s strength also rallied, bouncing back from weaker performance earlier in the year. Norfolk Southern rose 10.9% after beating profit expectations, with progress in reducing expenses and improving efficiency.
Market watchers welcomed the broadening of gains, seeing it as a sign of a healthier market compared to one led by a few dominating elites. Stocks were boosted by the latest update on inflation, which reinforced expectations of upcoming interest rate cuts. With inflation slowing down, traders are now anticipating a 100% probability of the Fed easing its main interest rate in September. The yield on the 10-year Treasury also fell, offering support for stock prices. Nearly 90% of the stocks in the S&P 500 rose, with companies like Deckers Outdoors and Newell Brands seeing significant gains.
Despite the overall market rally, some individual stocks experienced drops. DexCom, a diabetes care company, tumbled 40.7% after reporting weaker revenue than expected and a disappointing forecast for the current quarter. In contrast, Newell Brands soared 40.5% after surpassing profit targets. The S&P 500 rose nearly 60 points to 5,459.10, the Dow rallied over 650 points, and the Nasdaq composite climbed 176.16 points. Stock markets overseas were mostly higher, with Japan’s Nikkei 225 being an outlier with a slight slip amid expectations of a potential interest rate raise.
Overall, the rally on Wall Street reflected a shift in momentum from the dominance of Big Tech stocks to a broader range of companies. Positive earnings reports from companies like 3M and Norfolk Southern helped boost investor confidence, while expectations of interest rate cuts added further support. The market’s performance for the week highlighted the importance of a diverse range of stocks rising rather than relying on a select few. Moving forward, investors will be closely watching economic indicators and central bank policies to gauge the market’s direction.
