Stocks are once again ending a trading week having hit new records, with signs of an inflation cooldown prompting markets to grow more optimistic about the prospect of Federal Reserve interest rate cuts. All three major averages hit record highs on Wednesday, with the Nasdaq Composite rising more than 2%, the S&P 500 popping more than 1.5%, and the Dow Jones Industrial Average closing above 40,000 for the first time ever on Friday.
Looking ahead, highly anticipated earnings results from Nvidia are expected to be the key catalyst for markets in the coming week. Results from Target, Palo Alto Networks, and Lowe’s will also be closely tracked by investors. The economic calendar for the week is expected to be quieter, with updates on activity in the manufacturing and services sectors, as well as the final reading of consumer sentiment for May.
The recent alignment of investors with the Fed on interest rate cuts has led to bullish forecasts for the S&P 500, with analysts projecting further gains by the end of the year. The release of minutes from the Federal Open Market Committee’s May meeting on Wednesday will provide further insight into the discussion among officials.
Nvidia’s upcoming earnings report is highly anticipated, with analysts expecting significant growth in both earnings and revenue. The stock has seen a substantial increase in value over the past year, and all eyes will be on whether the company can continue to meet expectations.
The broader AI trade is also gaining momentum, with new companies in various sectors being identified as potential AI plays. The energy and utilities sectors have seen significant gains, with AI playing a role in driving enthusiasm. The expansion of the AI trade is a key focus for investors, with questions about its long-term impact on the market.
Overall, the stock market is poised for continued growth, with key earnings reports and economic data on the horizon. Investors will be closely watching developments in the coming week to gauge the sustainability of the current bullish narrative.
