The Nasdaq Composite ended the week on a high note, achieving a full week of record closes. This was fuelled by investor expectations of the Federal Reserve lowering interest rates due to signs of a weakening job market and tame inflation. The Nasdaq rose by 0.44% to close at 22,141.10, with a significant contribution to this increase coming from Tesla shares.
The S&P 500 had a slightly more mixed week, ending just 0.05% lower at 6,584.29 despite having its best weekly performance since early August. The S&P saw a week-to-date increase of 1.6%, making it its fifth positive week in six.
The Dow Jones Industrial Average lost 273.78 points or 0.59%, closing at 45,834.22. Despite this loss, the Dow still managed to post a positive week, the first in three weeks, with a week-to-date increase of 1%.
Looking forward to next week, investors are anxious about the Federal Reserve’s decision on whether it will lower its benchmark interest rate on September 17, with futures markets almost certain of a quarter percentage point cut.
In terms of key performers, Tesla shares surged, making a significant contribution to the Nasdaq’s gains. Alternatively, the Dow and S&P had mixed performances with investors now looking to the Fed’s interest rate decision.
Economic data concerning job growth and inflation factors like the consumer price index indicates a “decelerating labor market”. This supports the decision for a cut next week according to Bill Northey, investment director at U.S. Bank Wealth Management.
In summary, a week of mixed performances was observed for the Dow and S&P, but was largely offset by record high performances by Nasdaq, supported by economic factors pointing towards lower interest rates.
Investing.com’s stocks of the week include Oracle, Warner Bros. Discovery (WBD), Synopsys, and UnitedHealth (UNH). Oracle was a significant gainer this week, with its shares up 26.3% following an earnings release showcasing a strong AI pipeline. WBD shares rallied 59.4% in the last week due to potential takeover news. However, Synopsys shares have declined 30.4% over the past week after disappointing earnings, revenue, and guidance. UNH has gained around 14.5% this week, reaffirming its adjusted 2025 earnings per share expectations.
The Dow Jones Industrial Average closed at 46,108.00, gaining 617.08 points or 1.4%. The Nasdaq Composite added 157.02 points, or 0.7%, to close at 22,043.08, while the S&P 500 gained 55.43 points, or 0.9%, to close at 6,587.47. All three indices reached new highs on expectations that the Federal Reserve will cut interest rates next week.
Among other major movers this week, Planet Labs’ (NYSE: PL) shares increased by almost 50% due to encouraging quarterly results. The company posted a 20% gain in revenue and managed to substantially decrease its net loss.
Finally, markets are anticipating multiple interest rate cuts in 2025 by the Federal Reserve. Despite the rise in inflation, the weak signals from the labour market underpin expectations of rate cuts. Investors are pricing in a higher probability of one or more rate cuts beginning at the upcoming Fed meeting.
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