Stocks hit fresh all-time highs as the latest economic data reinforced bets the Federal Reserve will cut rates in September.
About 90% of the shares in the S&P 500 rose Friday. The index wiped out its previous session's slide — heading toward a 38th record this year. Tech megacaps rebounded, and smaller firms kept climbing.
Banks underperformed at the start of the U.S. earnings season, with results from Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. failing to fuel industry momentum.
Equity traders brushed off a weak reading on consumer sentiment to focus on prospects for rate cuts that could ultimately benefit Corporate America. Data also showed producer prices climbed slightly more than forecast — but categories used to calculate the Fed's preferred inflation measure, the personal consumption expenditures price index, were not so bad.
"We continue to expect the Fed to join the global rate-cutting cycle in September, with 50 basis points of easing this year," said Mark Haefele at UBS Global Wealth Management.
The S&P 500 rose to 5,650. It was set for its 10th weekly gain in 12 weeks.
The Nasdaq 100 added almost 1.5%. The Dow Jones Industrial Average topped 40,000. Nvidia Corp. led gains in big tech. Tesla Inc. rallied a day after tumbling over 8%. The Russell 2000 of small caps was on track for its best week since November.
Treasury 10-year yields declined two basis points to 4.19%. The pound is trading near its strongest level in a year versus the dollar and the highest in almost two years against the euro. To Krishna Guha at Evercore, a "new Fed phase" may sustain the stock-market breadth.
"We are now entering a new phase in which preemptive cuts (as opposed to reactive cuts driven by bigger rises in unemployment) can de-risk the forward growth outlook, he noted. "Provided the Fed is not moving too slowly to arrest the underlying weakening of the economy, this de-risking of the forward growth outlook favors market breadth and cyclical sectors."
