Fed Rate Cut Propels Dow to Record High, S&P 500 and Nasdaq Retreat in Mixed Market Close

US Stocks Close Mixed as Dow Hits Record High Following Fed Rate Cut

US stocks ended Friday’s session mixed, with the Dow Jones Industrial Average eking out a gain to close at a record high, while the S&P 500 and Nasdaq Composite retreated slightly. Despite the mixed finish, all three major indices posted weekly gains of over 1%, buoyed by the Federal Reserve’s first interest rate cut since 2020.

The Dow Jones Industrial Average rose 0.09% to 42,061.85, marking another record close. The S&P 500 dipped 0.19% to 5,702.63, while the Nasdaq Composite fell 0.36% to 17,948.32.

This week’s market rally was largely driven by the Federal Reserve’s decision to cut interest rates by 50 basis points, a move aimed at “recalibrating” monetary policy, as Fed Chairman Jerome Powell emphasized during Wednesday’s FOMC speech. Investors interpreted the rate cut as a positive sign for the economy, suggesting a potential soft landing as inflation cools and the labor market normalizes.

Raymond James CIO Larry Adam commented on the market outlook, stating, “The combination of Fed easing and a soft landing should prove to be a tailwind for risk assets, particularly equities.” He noted that historically, the S&P 500 has averaged a 5% gain in the 12 months following the Fed’s first rate cut.

However, Adam also cautioned that current market valuations leave little room for disappointment if economic conditions were to deteriorate. “With the S&P 500 rallying to record levels and currently at some of the most expensive valuations we have seen in history, there is not much room for disappointment if the soft-landing scenario were to falter,” he warned.

In other market news, Trump Media stock plunged to a record low as the lockup period for insiders expired, while home improvement retailers Home Depot and Lowe’s saw positive impacts from the rate cut. The oil market remained under pressure, with West Texas Intermediate crude falling 0.10% to $71.09 a barrel.

As investors digest the implications of the Fed’s policy shift, attention now turns to upcoming economic data and corporate earnings reports for further guidance on market direction.