Wall Street Rally Pushes S&P 500 and Nasdaq to Record Highs Despite Trade Tensions
Wall Street closed the week on a high note, with both the S&P 500 and Nasdaq Composite reaching record closing highs on Friday. This was fueled by optimism over potential trade deals and growing expectations of the Federal Reserve’s interest rate cuts.
Investors showed strong risk appetite, encouraged by economic data suggesting a potential monetary policy easing . However, market gains were trimmed late in the session after U.S. President Donald Trump abruptly ended trade talks with Canada in retaliation for its digital services tax targeting American tech companies.
Despite this setback, all three major U.S. stock indexes recorded weekly gains. Notably, the Nasdaq confirmed it had entered a bull market after rebounding from its April 8 low, referred to by traders as the post-“liberation day” trough.
“The market has shown remarkable resilience,” said Chuck Carlson, CEO of Horizon Investment Services. “Momentum is strong, and investors are chasing breakouts. Many are wary of missing out as the S&P 500 flirts with record territory.”
Economic reports offered a mixed picture. The Commerce Department’s latest Personal Consumption Expenditures (PCE) data revealed an unexpected contraction in consumer income and spending for May. Inflation remains above the Federal Reserve’s 2% annual target, though tariffs have yet to significantly affect prices.
Meanwhile, a University of Michigan survey indicated a modest improvement in consumer sentiment, although it remains subdued compared to the post-election surge in December.
According to CME Group’s FedWatch tool, markets are now pricing in a 76% chance of a rate cut in September, and a 19% chance that easing could begin as early as July.
Adding to investor confidence, a U.S. official announced an agreement between Washington and Beijing to fast-track rare-earth mineral exports from China, ahead of the July 9 expiration of Trump’s “reciprocal” tariff moratorium. Additionally, Treasury Secretary Janet Yellen said trade deals with 18 key partners could be finalized by Labor Day on September 1.
On the day, the Dow Jones Industrial Average rose 432.43 points (1.00%) to 43,819.27. The S&P 500 gained 32.05 points (0.52%) to finish at 6,173.07, while the Nasdaq Composite climbed 105.55 points (0.52%) to close at 20,273.46.
Among the 11 sectors of the S&P 500, consumer discretionary stocks led the way, while the energy sector lagged.
Micron Technology boosted sentiment in AI-related stocks with a strong earnings outlook. Nvidia gained 1.8%, pushing closer to a $4 trillion market valuation after recently overtaking all other companies in market cap. Nike shares surged 15.2% following a better-than-expected revenue forecast.
Market breadth was mixed: Advancing stocks outnumbered decliners by a 1.29-to-1 ratio on the NYSE, while on the Nasdaq, declining issues outpaced gainers by a 1.11-to-1 margin. The S&P 500 recorded 35 new 52-week highs and 6 new lows. The Nasdaq registered 101 new highs and 68 new lows.
Total volume on U.S. exchanges reached 22.07 billion shares, well above the 20-day average of 18.27 billion.
