The Dow jumped more than 400 points on Friday — nearing its all-time high — as investors reevaluated the possibility of a bigger interest rate cut by the Federal Reserve next week.
In recent trading, the Dow Jones Industrial Average soared 379 points, or 0.9%, to 41,476. It closed at a record of 41,563.08 on Aug. 30.
The S&P 500 gained 0.6%, and the Nasdaq also advanced 0.6%. Both are on pace for five-day winning streaks.
Traders’ bets of a 50-basis point rate cut jumped overnight, now standing at 47% compared with 14% on Thursday, CME’s FedWatch Tool showed.
Former New York Fed President Bill Dudley said there was a strong case for a 50-bps interest rate cut. Separate media reports calling the decision “a close call” also added to the uncertainty.
“A couple of articles were published in the Wall Street Journal and the Financial Times suggesting that a 50-bps move was still in play, which has led markets to once again reevaluate their expectations,” Deutsche Bank analysts said.
Bets of the Fed sticking to a smaller 25-bps cut had firmed on Thursday following a slightly higher producer prices report that followed the August consumer prices data.
“Markets want the FOMC to ease fast and get on with the risk of recession fighting. The meeting is a risky event and it will remain so regardless of the 25 or 50 bps easing next week,” said Bob Savage, head of markets strategy and insights at BNY Mellon.
All major US benchmarks had closed higher in the previous session, boosted by rising megacap stocks, keeping them on track for weekly gains.
Meanwhile, a preliminary reading of the University of Michigan’s September consumer sentiment index stood at 69 compared with analysts’ estimates of 68.5.
Among individual movers, Boeing 2.6% as its West Coast factory workers walked off the job early on Friday after overwhelmingly rejecting a contract deal.
Adobe slid 9% after forecasting fourth-quarter earnings below analysts’ estimates, while Oracle jumped 2.7% after the cloud computing company raised its fiscal 2026 revenue outlook.
Chinese e-commerce firm PDD Holdings dropped 2.4% after the Biden administration said it was moving to curb low-value shipments entering the US duty-free under the $800 “de minimis” threshold.
Uber gained 5.7% after the ride-hailing platform said it would bring autonomous ride hailing to Austin, Texas, and Atlanta, in partnership with Alphabet’s Waymo.
