U.S. stocks closed their best of the year so far with a quiet finish on Friday, remaining near their records. The S&P 500 slipped slightly from its all-time high, while the Dow Jones Industrial Average fell and the Nasdaq composite rose to add to its record. Nike and Lululemon Athletica saw their shares drop despite better-than-expected results, with Nike in the midst of fundamental changes to its products. Reddit fell after a big gain on its first day of trading, while FedEx climbed after reporting stronger profit than expected.
Digital World Acquisition Corp. saw its stock fluctuate wildly after its shareholders approved a merger with the company behind former President Donald Trump’s Truth Social platform. Critics have raised concerns about the stock being overvalued and Truth Social losing money. In the bond market, Treasury yields fell, with the yield on the 10-year Treasury declining after the Federal Reserve indicated it may still deliver three rate cuts this year. Expectations for a Fed pivot on rates are likely to support stocks, along with surging investment in artificial intelligence and other market drivers.
The Federal Reserve’s main interest rate is currently at its highest level since 2001, and investors are hoping for rate cuts to begin in June to relieve pressure on the economy and financial system. Stocks in stock markets abroad experienced mixed trading, with indexes falling in Hong Kong and Shanghai while moving more modestly elsewhere in Asia and Europe. David Lefkowitz, head of U.S. equities at UBS Global Wealth Management, expects the S&P 500 to remain close to its current levels by the end of the year, despite its significant gains so far in 2024.
Overall, the stock market closed positively for the week, with some companies reporting better-than-expected profits but others seeing their shares slip. The market’s focus remains on potential rate cuts by the Federal Reserve and other market drivers like investment in artificial intelligence. Despite concerns about overvaluation, stock markets abroad saw a mix of gains and losses, with some indexes falling in Asia but remaining steady in Europe. Investors will continue to monitor Fed decisions and market trends to determine the direction of stocks in the coming weeks.
