On Friday, prominent equity indices in the United States closed on a positive note as investors poised themselves for the Federal Reserve's impending monetary policy decisions to be unveiled next week. The Dow Jones Industrial Average and the Nasdaq Composite both recorded an increase of 0.7%, settling at 41,393.8 and 17,684, respectively.
The S&P 500 index experienced a slightly lower rise of 0.5%, reaching 5,626. Notably, all sectors across the board saw gains, with utilities and communication services leading the charge. When we look at the week as a whole, the Nasdaq demonstrated remarkable growth with an impressive jump of nearly 6%, while the S&P 500 also posted gains of 4%.
The Dow Jones, albeit with a more modest rise, still increased by 2.6%. Attention is now shifting to the Federal Open Market Committee (FOMC) as it prepares for its two-day meeting starting next Tuesday. Current market indicators suggest there is a 53% chance that the FOMC will opt to lower the benchmark lending rate by 25 basis points during their meeting on Wednesday.
The remaining probabilities indicate the market is leaning towards a more aggressive approach with a potential reduction of 50 basis points, as per insights from the CME FedWatch tool. The brokerage firm Jefferies has aligned its expectations with the market sentiment, anticipating a 25 basis point cut.
They emphasized the likelihood of substantial changes in the language used within the policy statement, which would reflect a shift in the balance of risks, particularly toward the labor market, alongside increased confidence in achieving the FOMC’s inflation target of 2% over time. This, they believe, will set the stage for further rate cuts in the months to come. In addition to the monetary policy updates, recent economic data suggests improvement in consumer sentiment within the U.S., as it peaked this month to its highest level since May.
Contrastingly, year-ahead inflation expectations have fallen to the lowest point witnessed since December 2020, according to preliminary data extracted from the University of Michigan's Surveys of Consumers. In commodity markets, West Texas Intermediate crude oil prices gained 0.5%, reaching $69.28 per barrel, marking a positive trajectory for the week.
Despite concerns raised by the International Energy Agency regarding sharp declines in global oil demand growth attributed to a decelerating Chinese economy, Saxo Bank noted that crude oil prices were recovering from a three-year low. In corporate news, Warner Bros. Discovery ($WBD) experienced a significant boost, with its shares soaring nearly 11%, thereby earning the title of the best performer today on both the S&P 500 and the Nasdaq.
This surge followed the company's announcement of a multiyear distribution agreement with Charter Communications ($CHTR), which will integrate linear video and streaming services, leading to a 0.3% increase in Charter's shares on Friday. Conversely, Boeing ($BA) faced challenges, recording the steepest decline on the Dow as well as among the S&P 500, with shares plunging by 3.7%.
This drop was attributed to the overwhelming rejection of a tentative labor agreement between the aircraft manufacturer and its union by members of the International Association of Machinists and Aerospace Workers. Furthermore, Moody's indicated that it has placed Boeing's ratings under review for a potential downgrade. In the tech sector, Adobe ($ADBE) shares fell sharply by 8.5%, marking the steepest decline for both the S&P 500 and the Nasdaq.
This downturn occurred following Adobe's announcement of a fiscal fourth-quarter revenue forecast that fell below Wall Street expectations, despite reporting stronger-than-anticipated results for its third quarter. Turning to precious metals, gold prices increased by 1.1%, reaching $2,609.40 per troy ounce, while silver gained 3.2%, reaching $31.08 per ounce.
As the markets look ahead, the blend of economic indicators and corporate performance sets a compelling narrative leading into next week..