U.S. stock indexes experienced a mild midweek pullback but ended the week on a strong note. The NASDAQ advanced more than 2%, while the S&P 500 and Dow each gained over 1%, pushing all three to fresh record highs. For the S&P 500, it marked the sixth positive week in the past seven.
In monetary policy, the U.S. Federal Reserve voted 11-1 to approve a quarter-point interest rate cut—the first since late 2024. The move met market expectations, and futures pricing on Friday indicated a 92% chance of two more quarter-point cuts in October and December, according to CME FedWatch.
Small-cap equities outperformed their large-cap counterparts. The Russell 2000 briefly surpassed its November 2021 record on Thursday and finished the week up about 2.2%, though it remains behind large caps on a year-to-date basis.
Despite the Fed’s cut, U.S. Treasury yields edged higher, with longer maturities leading the rise. The 10-year Treasury yield closed near 4.13% on Friday, up from 4.06% a week earlier.
Lower rates rippled through housing: the average 30-year fixed mortgage rate fell for a fourth straight week to 6.26% from 6.35%, down sharply from January’s 7.04%, according to Freddie Mac.
Consumer data stayed upbeat. U.S. retail sales grew 0.6% in August, outpacing forecasts and matching July’s increase, despite a softer labor market and persistent inflation pressures.
Corporate activity softened, however. S&P 500 share repurchases totaled roughly $235 billion in Q2, a 20% drop from the record near-$294 billion in Q1, amid tariff and policy uncertainty.
Looking ahead, investors await Friday’s inflation data to see if the recent trend of modestly rising prices continued. July’s core Personal Consumption Expenditures (PCE) index rose at an annual 2.9% pace, the fastest in five months.