The Nasdaq Composite continued its winning streak on Friday, securing its fifth consecutive record close as new data indicated a cooling of inflation and a retreat in Treasury yields. The tech-heavy index gained 3.2% for the week, outperforming the S & P 500, which rose 1.6%, and the Dow Jones Industrial Average, which fell 0.5%.
Economic updates played a significant role in driving the gains, with the May consumer price index (CPI) and producer price index (PPI) both coming in weaker than expected. The data showed that the Federal Reserve’s efforts to control inflation through interest rate adjustments are working, leading investors to anticipate potential rate cuts in the future.
Federal Reserve Chairman Jerome Powell acknowledged the progress in controlling inflation but emphasized the need for more data before considering rate cuts. However, market expectations differ, with the CME FedWatch Tool predicting two rate cuts this year, with the first likely to occur in September.
In terms of sector performance, information technology emerged as the big winner of the week, with a nearly 6% increase driven by strong performances from companies like Apple, Broadcom, Oracle, and Adobe. On the other hand, the energy sector experienced losses, followed by financials and industrials.
Looking ahead, investors are keeping an eye on key economic indicators such as retail sales, industrial production, and housing data for further insights into consumer behavior and economic trends. Earnings reports from companies like Lennar and Darden Restaurants will also provide valuable information on the state of the housing market and consumer spending.
Overall, the market remains optimistic about the future, with hopes for continued economic growth and potential rate cuts by the Federal Reserve. The Nasdaq’s record-setting performance reflects this positive sentiment, signaling a strong start to the summer for investors.
