Wall Street rallies as Nasdaq, S&P 500 hit record highs amid Fed optimism

Wall Street extended its rally on Friday, with both the S&P 500 and Nasdaq closing at all-time highs, driven by renewed optimism over global trade deals and solid expectations of a possible interest rate cut from the U.S. Federal Reserve.

Although momentum was slightly tempered by President Donald Trump’s decision to end trade talks with Canada over its digital tax on U.S. tech companies, the three major indexes still posted weekly gains.

The Nasdaq, dominated by technology stocks, confirmed its entry into a bull market, rebounding sharply from its April 8 low — the so-called “liberation day” trough.

Meanwhile, the Dow Jones Industrial Average remained 2.7% below its December 4 record.

“This market’s been pretty resilient,” said Chuck Carlson, CEO of Horizon Investment Services.
“Investors are chasing momentum and don’t want to miss potential breakouts.”

Economic Data: Mixed Signals

• A report from the Commerce Department revealed an unexpected dip in consumer income and spending during May.
• Despite the tariffs in place, inflation—as measured by the PCE index—remains above the Fed’s 2% target.
• The University of Michigan consumer sentiment index improved in June, but still lags behind post-election highs.

 Interest Rate Cut Outlook

According to the CME FedWatch Tool:
• There’s a 76% probability of a rate cut in September.
• A smaller 19% chance remains for a rate cut as early as July.

Confidence was also boosted by news that Washington and Beijing agreed to accelerate rare-earth shipments from China to the U.S., ahead of the July 9 deadline tied to Trump’s delayed tariffs.