Robust economic data propelled the S&P 500 to a historic high on Friday, with growing optimism about potential Federal Reserve rate cuts.
In the early stages of trading, the benchmark index showed signs of surpassing its previous closing record of 4,796.56 established two years ago. By midday, it had exceeded its intraday peak of 4,818.62.
The Dow Jones Industrial Average had already exceeded its earlier high last month and achieved a new peak on Friday. Simultaneously, the Nasdaq Composite, driven by gains in chipmakers, led the tech sector higher, although it remains more than 4% below its previous highs.
This surge in the stock market coincided with the University of Michigan’s consumer sentiment survey, indicating improved confidence among Americans in the economy, coupled with expectations of a cooling in prices.
Notably, inflation expectations for the upcoming year dropped to 2.9%, the lowest since December 2020, providing the Federal Reserve with additional flexibility to implement monetary policy adjustments.
Robert Frick, an economist at Navy Federal Credit Union, highlighted the significant impact of lower inflation on Americans, citing declining pump prices since September and wage increases outpacing inflation rates. The robust job market also played a substantial role in shaping Americans’ positive outlook on the overall economy.
