Wall Street experienced a strong recovery on Friday, with the Dow Jones Industrial Average spearheading the rally after a moderate inflation reading supported hopes for an early Federal Reserve interest rate cut.
To be specific, Reuters reported that the Dow surged by 1.63%, reaching a one-month high, largely fueled by a notable 19% jump in 3M's stock, following an upward revision of its annual profit forecast.
Tech Stocks Ahead of Fed Interest Rate Cut
Tech stocks, which had suffered massive losses earlier in the week, also showed signs of recovery. The Philadelphia SE Semiconductor Index, which tracks major chip companies, rebounded as shares of Nvidia, Marvell Technology, Broadcom, Texas Instruments, and Qualcomm each gained over 1%.
This recovery was a stark contrast to the declines seen in tech stocks such as Tesla and Alphabet, which continued to face pressure from disappointing earnings reports.
The entire market also saw gains, with the S&P 500 and Nasdaq Composite rising by 1.06% and 0.92%, respectively. However, both indexes were on track for a second consecutive week of losses due to a recent sell-off in tech stocks.
Tech stocks and the overall market are showing mixed results because people think the Federal Reserve might start lowering interest rates. After recent inflation data showed a small rise in the Personal Consumption Expenditures (PCE) price index, many still believe there's a good chance of a rate cut by September.
Economists think an immediate rate cut is unlikely, but the Fed might recognize better trends in reducing inflation at its next meeting, which could boost market confidence.
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