U.S. stocks continued to rise in midday trading on Friday, with the Dow Jones Industrial Average rising by more than 420 points. The market focus shifted to the Federal Reserve's monetary policy meeting next week. Expectations for the Federal Reserve to cut interest rates by 50 basis points have risen again.
The Dow Jones Industrial Average rose 420.46 points, or 1.02%, to 41,517.23; the Nasdaq rose 132.94 points, or 0.76%, to 17,702.62; and the S&P 500 rose 39.10 points, or 0.70%, to 5,634.86.
U.S. stocks closed higher on Thursday, with the S&P 500 and Nasdaq Composite rising for the fourth consecutive trading day, continuing their strong performance this week. As of Thursday's close, the S&P rose nearly 3.5%, the Nasdaq rose 5.3%, and the Dow rose 1.9%.
Deutsche Bank raised its year-end target for the S&P 500, the benchmark U.S. stock index, to 5,750 from 5,500, citing increased stock buybacks, strong corporate earnings and strong inflows driven by strong risk appetite.
Shah, chief investment officer of public investments at Goldman Sachs Asset Management, recommends investors focus on small-cap stocks as the Federal Reserve is widely expected to start cutting interest rates next week. He noted that as interest rates fall, small companies will be the main beneficiaries of rate cuts due to their higher proportion of floating-rate loans.
Dan Greenhaus, chief strategist at Solus Alternative Asset Management, said: "The bottom line is that the U.S. consumer and economy continue to perform well, and corporate earnings continue to be above expectations. So while the sharp decline in artificial intelligence companies triggered the recent sell-off in U.S. stocks, it is certain that the rebound seems to be completely reasonable because these problems do not seem to be continuing to expand."
Market focus shifts to the Federal Reserve's monetary policy meeting
Wall Street is now looking forward to the Federal Reserve's monetary policy meeting on September 17-18. The market generally expects the Fed to cut interest rates by 25 basis points. The Fed's target interest rate range is now 5.25% to 5.5%.
The market-implied probability of a 50 basis point rate cut next week began to rise, while the market had almost completely ruled out this possibility in the past few days.
Investors' continued buying of October federal funds rate futures has pushed up the probability of a 50 basis point rate cut at the Federal Reserve's policy meeting next week to about 40%, and the market-implied rate cut on September 18 is about 35 basis points.
The change in expectations for the extent of the Fed's interest rate cut was triggered by a well-known media report on Thursday that Fed policymakers are still considering whether to cut interest rates by 50 basis points or 25 basis points.
William Dudley, former president of the New York Fed, also believes that the Fed has a strong reason to cut interest rates by 50 basis points. He said at the Bretton Woods Committee Forum held in Singapore that in the current economic environment, the Fed is likely to cut interest rates by 50 basis points at its meeting next week.
Dudley stressed that the unexpected slowdown in the U.S. labor market and job market risks outweigh the inflation challenges, and believed that these factors supported his call for a rate cut.
Dudley's speech rekindled traders' expectations of a large interest rate cut by the Federal Reserve, triggering a rise in U.S. Treasuries and bringing some new uncertainties to the Federal Reserve's decision next week.
On the economic data front on Friday, preliminary data released by the University of Michigan showed that the consumer confidence index rose to 69 from 67.9 in August, while the median forecast of economists surveyed was 68.5.
Benefiting from the prospect of interest rate cuts and the mildest short-term inflation expectations since the end of 2020, the U.S. consumer confidence index rose to a four-month high in early September.
Consumers expect inflation to be 2.7% over the next year, down from 2.8% a month ago, marking the fourth straight month of declines in short-term inflation expectations. They forecast annualized inflation of 3.1% over the next five to 10 years, up from 3% a month ago.
A series of economic data released recently reflects slowing inflation, which seems to support the case for a rate cut.
The Consumer Price Index (CPI) for August, released this week, rose 2.5% year-on-year, the lowest level since February 2021. In addition, the Producer Price Index (PPI) rose 0.2% in August, in line with expectations.
Focus stocks
Saudi Arabia is reportedly optimistic about obtaining Nvidia's high-performance chips, which will enable it to develop and run cutting-edge artificial intelligence models.
Data from electric vehicle data website CnEVPost shows that Tesla registered 16,200 insurance policies in China in the first week of September, a month-on-month increase of 12.5%. This is the highest level in a single week since the end of June and the third highest weekly registration number this year.
In addition, data from the Passenger Car Association showed that Tesla sold 63,456 vehicles in China in August, a month-on-month increase of 37.27% and a year-on-year decrease of 1.91%.
It was reported recently that the European Union's highest court ruled that Apple lost a decade-long tax lawsuit. In this case, the European Commission required Ireland to recover up to 13 billion euros in back taxes from Apple.
Microsoft announced that it will stop supporting the old digital rights management (DRM) service, a decision that will directly affect users of Windows 7 and Windows 8 operating systems. With this change, Windows Media Player and Silverlight clients in these operating systems will not be able to play DRM-protected content.
Microsoft stated on its official website that the discontinuation of support for older DRM services will result in playback restrictions.
Google announced on Friday that it will launch a series of new security adjustments to strengthen the protection of personal data during web browsing. Among them, Google strengthened Chrome's security check feature, which runs automatically in the background and can take additional proactive measures to protect users' security.
Another important measure is to automatically revoke notification permissions for websites that may abuse notification permissions based on the blacklist of Google Safe Browsing. This method can prevent websites from inducing users to grant unnecessary permissions, thereby reducing the risk of privacy leakage for users.
Amazon announced Thursday that it is investing more than $2.1 billion in its delivery service partner program. The company said the funds will be used for safety programs, rate cards, training, value-added services and rewards. Over the past six years, the company's total investment in small business delivery service programs has reached $12.3 billion.
Amazon said: "To help DSPs (digital service platforms) provide drivers with higher wages and benefits, we will invest an additional $660 million next year in DSP rate card increases and bonuses. We expect that our investment will help DSPs increase drivers' wages to a national average of nearly $22.00 per hour (depending on their geographic location), an increase of 7% over last year." It is reported that many DSPs already pay their drivers more than $22 per hour.
Boeing's 33,000 workers at two factories in the United States will go on strike starting at midnight on September 14.
Oracle raised its revenue guidance for fiscal year 2026. After the company released its financial report, its target price was raised by major banks.
Adobe's third-quarter results were better than expected, but its fourth-quarter guidance was lackluster.
Xpeng Motors’ first extended-range vehicle will go into mass production next year.
