Stocks rebounded on Friday, snapping a five-day losing streak for the S&P 500. The Dow led the advance, gaining 1.6% for the week and notching its first record high of 2025. The S&P 500 finished marginally higher, while the NASDAQ posted a slight decline.
Equities surged following Fed Chair Jerome Powell’s remarks at the central bank’s annual Jackson Hole symposium. Powell highlighted recent labor market softness and said that “the balance of risks” between inflation and growth appears to be shifting, signaling the possibility of a rate cut at the Fed’s September 16–17 meeting.
Market odds of a September rate cut jumped after the speech. Futures prices on Friday implied an 83.1% probability of a quarter-point cut, according to CME Group’s FedWatch tool. Bond markets reflected that shift, with U.S. Treasury yields easing. The 2-year yield posted the sharpest move, dropping to 3.69% from 3.79% a day earlier, while the 10-year yield closed near 4.26%.
Canada announced on Friday that it will roll back many of the retaliatory tariffs it imposed five months ago on U.S. imports, though 25% duties on autos, steel, and aluminum remain. U.S. officials said negotiations with Canada would continue.
Value stocks outperformed growth for a second straight week, narrowing growth’s year-to-date lead. A large-cap value index rose 1.8% while a growth benchmark slipped 0.8%, dragged lower by underperforming technology shares.
Housing data showed a modest lift from easing mortgage rates. Existing-home sales climbed 2.0% in July, topping expectations, according to the National Association of Realtors. The median sales price ticked up from a year earlier but remained below June 2025’s record level.
Looking ahead, Fed officials will be watching Friday’s release of July’s Personal Consumption Expenditures Index, their preferred inflation gauge, ahead of next month’s policy meeting. June’s report showed annual PCE inflation at 2.6%, the highest in four months, with core inflation running slightly hotter at 2.8%.