US stocks surged on Friday afternoon, setting the stage for strong weekly gains, driven by growing expectations that the Federal Reserve may opt for a larger interest rate cut next week. Tech stocks led the rally, with major indices such as the S&P 500 and Nasdaq climbing, while speculation about a half-point rate cut fueled investor optimism.
- The S&P 500 and Nasdaq gained 0.7%, continuing a five-year rally for tech stocks, while the Dow Jones added over 400 points.Traders increased their bets on a 0.5% interest rate cut by the Fed, with odds jumping to 49% after being at just 15% the previous day.Former New York Fed President Bill Dudley said there is a “strong case” for a larger cut, adding to the market speculation.Treasury yields dropped, with the 10-year yield falling to 3.66% and the 2-year yield at 3.58%, signalling changing monetary policy expectations.Adobe shares declined after a disappointing AI-related outlook, while Oracle stocks rose on optimism about future cloud demand.Boeing shares dropped as factory workers went on strike, halting production in Seattle. The rising momentum in stocks, particularly tech, is driven by shifting expectations for a major Fed pivot. However, the uncertainty around rate decisions and labour market risks may still cause market volatility in the near future.
