On Friday, US benchmark equity indexes experienced a notable rise as investors analyzed remarks made by a Federal Reserve official. The S&P 500 recorded an uptick of 0.5%, settling at 5,344.2, while the Nasdaq Composite mirrored this increase with a 0.5% rise to 16,745.3. The Dow Jones Industrial Average also climbed, albeit modestly, gaining 0.1% to close at 39,497.5.
Among the various sectors that make up the market, communication services shone brightly, leading the advancing group, whereas the materials sector marked the sole decline. Examining the weekly performance, the Dow witnessed a decline of 0.6%, with the Nasdaq following closely behind with a drop of 0.2%.
The S&P 500 remained relatively unchanged over the week. In a significant commentary from Boston Fed President Susan Collins, she indicated that it may soon be appropriate to begin easing monetary policy, contingent on the economic data continuing in the expected direction. "My outlook is for continued gradual reduction back to our 2% (inflation) target amid a healthy labor market," Collins conveyed in an interview.
Her statements were shared with a broader audience via the Providence Journal on Thursday, where her responses were later published on the website with edits for clarity on Friday. In a guiding report, ING has projected that the Federal Open Market Committee (FOMC) is likely to reduce interest rates by half a percentage point in the upcoming month.
This move is anticipated to be followed by a series of cuts, estimated at 25 basis points each, as economic recession concerns loom on the horizon. The FOMC had previously enacted a tightening of monetary policy, raising interest rates by 525 basis points from March 2022 through July 2023 to tackle inflation.
Following this series of hikes, the committee has opted to keep rates stable since their last pause, which occurred late last month. In further market activity, the US 10-year yield experienced a decline of 5.7 basis points, landing at 3.94% on Friday, while the two-year rate saw a slight increase of 1.1 basis points to 4.06%.
Turning to specific companies, Akamai Technologies ($AKAM) saw its stock surge by 11%, marking the largest gain on the S&P, following a positive adjustment to its full-year earnings outlook after the company reported Q2 results that outperformed Wall Street's predictions. Trade Desk ($TTD) shares enjoyed a remarkable rise of 13%, registering the most considerable advancement on the Nasdaq, following its strong performance in Q2 earnings and revenue that surpassed estimates.
However, it wasn't all positive news in the market. Insulet ($PODD) shares took a hit, dropping 8.8%, making it the most significant decline on the S&P following the company's Q2 adjusted earnings report that fell short of expectations. Likewise, Intel ($INTC) shares fell by 3.8%, marking the most substantial drop on the Dow, and the second-largest on both the S&P and Nasdaq.
This dip followed Moody's decision to downgrade Intel's senior unsecured ratings from A3 to Baa1, adjusting its ratings outlook to negative from stable. This downgrade is attributed to expectations for "significantly weaker" profitability over the next 12 to 18 months, as detailed by Moody's, alongside lower-than-expected demand across nearly all product segments and continuing market share losses. Moreover, the price of West Texas Intermediate crude oil increased by 1%, reaching $76.98 per barrel.
Gold saw a modest gain of 0.2%, reaching $2,469.30 per troy ounce, while silver experienced a drop of 0.4%, settling at $27.5 per ounce. The dynamics of these commodities further illustrate the evolving landscape of the financial markets as investors remain vigilant amid shifting economic indicators and corporate performances..