Wall Street rebounded on Friday, driven by a strong performance in the Dow Jones Industrial Average, as some megacap tech and chip stocks regained ground. This recovery was supported by a key inflation reading that maintained hopes for an early interest rate cut.
3M Co. jumped 19%, boosting the Dow to a one-month high after raising the lower end of its annual adjusted profit forecast. The Philadelphia SE Semiconductor Index was on track to end a three-day losing streak, with Nvidia, Marvell Technology, and other prominent chipmakers seeing gains.
The Magnificent Seven stocks showed mixed results; Microsoft and Meta Platforms rose over 1%, while Tesla and Alphabet declined. The 10-year Treasury yield fell after the inflation data release.
Economically sensitive small-cap stocks also performed well, with the Russell 2000 jumping 1%, marking its best three-week run since August 2022. A moderate rise in U.S. prices suggested an improving inflation environment that could allow the Federal Reserve to start easing its policies, possibly in September.
Brian Jacobsen, chief economist at Annex Wealth Management, stated that the Fed might not cut rates next Wednesday but could show more confidence in disinflationary trends. 98% of traders still expect two rate cuts by December, as indicated by LSEG data and CME’s FedWatch tool.
By 11:46 a.m. ET, the Dow was up 652.82 points (1.63%), the S&P 500 was up 57.19 points (1.06%), and the Nasdaq Composite gained 0.92%. Still, the S&P 500 and Nasdaq were on track for their second consecutive week of losses due to recent sell-offs in tech stocks influenced by disappointing earnings from Alphabet and Tesla.
Despite this, underperforming sectors like mid and small-cap stocks appeared more attractive, with Industrials and Materials leading the gains across the S&P 500 sectors, while Energy fell alongside lower oil prices.
In corporate earnings, Deckers Outdoor surged 8% after raising its annual profit forecast. Baker Hughes rose 3.3% following better-than-expected second-quarter profit results, while Dexcom plummeted 42% after cutting its annual revenue forecast. Of the 206 companies in the S&P 500 that reported second-quarter earnings, 78.6% exceeded analyst expectations.
Advancing issues outnumbered decliners by a 3.46-to-1 ratio on the NYSE and by a 2.05-to-1 ratio on the Nasdaq.
Source: Wall St ends higher on revival supported by inflation data, tech }}.
