The S&P 500 Index rallied on Friday and ended modestly higher after losing ground for the first four days of the week. Federal Reserve Chair Jerome Powell’s prepared remarks on Friday morning at a symposium in Jackson Hole, Wyoming, appeared to open the door to rate cuts, lifting investor sentiment. The dollar dumped as stocks, bonds, gold, crypto, and oil all ripped higher. US small caps led the charge higher on Friday ripping over 3% higher on the week. The Dow closed at its first new record high since December. However, despite the big gains on Friday, Nasdaq still ended the week lower. Indeed, underneath the surface, equity markets experienced a bit of a rotation: Mega-cap technology stocks underperformed, while value and cyclical parts of the market played catch-up. Large retailers, including Walmart, Target, and Home Depot, reported earnings last week. Overall, the companies pointed to consumers that continue to spend, especially on value and discount goods, despite uncertainties around tariffs and the economy. The pan-European STOXX Europe 600 Index ended 1.40% higher, buoyed by hopes of lower U.S. borrowing costs. Japan’s stock markets fell over the week, with the Nikkei 225 Index declining 1.72%. Mainland Chinese stock markets recorded a weekly gain as a recent stabilization in U.S.-China trade ties spurred risk-on sentiment. Treasury yields plunged on Friday (2Y -12bps), dragging the entire curve down (in yields) on the week with the belly outperforming.
Have a great week-end