NEW YORK: U.S. stocks rallied on Friday as investors increased bets that the Federal Reserve will cut interest rates next month, while all three of the major indexes posted losses for the week amid concerns over lofty technology valuations.
The Nasdaq fell for a third straight week in its longest run of weekly losses since March. The index is now down 7% from its October high.
During the session, shares of Nvidia briefly jumped after sources familiar with the matter said the Trump administration is considering green-lighting sales of the company’s H200 artificial intelligence chips to China. The stock ended down 1%, still well off of its lows of the session. Nvidia is down 5.9% for the week even though the AI leader late on Wednesday reported strong quarterly results and gave a robust forecast.
New York Fed President John Williams, a voting member of the Federal Open Market Committee, said the central bank can still cut rates “in the near term without putting its inflation goal at risk. That boosted market views for a rate cut at the Fed’s December meeting, even as other policymakers insisted that borrowing costs should remain steady for now.
Markets are now pricing in a nearly 72% chance of a rate cut from the central bank at its December meeting, according to the CME’s FedWatch Tool, up from 39.1% in the prior session.
“The big tailwind today is that shift in rate cut odds for the December Fed meeting,” said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.
All 11 of the S&P 500 sectors ended higher.
The Dow Jones Industrial Average rose 493.15 points, or 1.08%, to 46,245.41, the S&P 500 gained 64.23 points, or 0.98%, to 6,602.99 and the Nasdaq Composite gained 195.04 points, or 0.88%, to 22,273.08.
For the week, the Dow was down 1.9%, the S&P 500 was down about 2% and the Nasdaq was down 2.7%.
Also, the small-cap Russell 2000 index fell for a fourth straight week in its longest run of weekly losses since March.
Stocks have been especially volatile in the past two sessions, reflecting heightened investor anxiety over high valuations in the technology sector, ambitious AI spending plans and concerns about what might happen at the December Fed meeting.
