Dow Hits New Record As Stocks Close Out Strong Week Amid Cooling Inflation

Jibran Munaf
Jibran Munaf

Image: Brendan McDermid | Reuters

The stock market ended the week on a positive note, with the Dow Jones Industrial Average (^DJI) gaining 0.3% and hitting a fresh record high on Friday. Despite mixed trading across other indexes, investor optimism remained high as inflation data signaled a potential shift in the Federal Reserve’s monetary policy.

While the S&P 500 (^GSPC) dipped slightly by 0.1% and the Nasdaq Composite (^IXIC) dropped 0.4%, both indexes posted weekly gains. The Dow and S&P rose 0.7%, while the Nasdaq climbed 1%, marking a strong finish to the week for all major stock gauges.

The optimism was largely driven by new data showing cooling inflation, particularly in the Fed’s preferred inflation measure, the Personal Consumption Expenditures (PCE) index. The core PCE index, which excludes food and energy, rose just 0.1% in August, below market expectations. This lower-than-expected inflation reading has fueled speculation that the Fed could cut interest rates by 50 basis points in its next policy meeting, with 52% of traders now betting on a sizable rate cut.

The market’s confidence in a “soft landing” for the U.S. economy has been bolstered by robust GDP numbers and easing price pressures. If the Fed follows through on the expected rate cuts, it could further support economic growth without triggering a recession.

Global markets also received a boost, particularly in China, where government stimulus measures helped lift mainland stocks to their best weekly performance since 2008. Shares of Chinese giants like Alibaba (BABA), JD.com (JD), and Meituan surged, contributing to a buying spree that buoyed luxury stocks globally.

Investors will be watching closely in the coming weeks to see if this momentum continues as the Federal Reserve’s next move on interest rates approaches.

Stock Markets Retreat After Fed-Fueled Rally Amid Economic Caution