Tech Stocks Surge As Federal Reserve Rate Cut Expectations Rise

The Nasdaq and S&P 500 rose on Friday, driven by gains in Tesla, Amazon, and other tech stocks. Optimism about a potential Federal Reserve rate cut in September fueled investor confidence. U.S. consumer spending increased in July, indicating economic strength. The market is seeing a 'soft landing' scenario.

The Nasdaq and S&P 500 rose on Friday, with Tesla and Amazon leading the charge after fresh U.S. economic data boosted expectations for a modest interest rate cut by the Federal Reserve in September. Solid consumer spending in July showed continued economic strength, with prices rising moderately.

'Investors are seeing another sign of being in a soft landing,' noted Cameron Dawson, chief investment officer at Newedge Wealth. 'It's another one of those Goldilocks reports, threading the needle right down the center. The market is getting exactly what it wanted.' Amazon and Tesla both added roughly 2%.

Broadcom climbed 2%, while Marvell Technology surged 9%, buoyed by quarterly forecasts exceeding estimates. The personal consumption expenditures report was the final major economic data release before the Fed's September meeting, with Chair Jerome Powell recently indicating support for an upcoming policy adjustment.

Money markets now largely anticipate a 25 basis point rate cut in September, with the likelihood of a 50 basis point cut diminishing after Friday's data, according to CME Group's FedWatch Tool. After a tumultuous month for Wall Street, marked by labor market moderation fears in early August, shares have since rebounded.

Trading volume was light ahead of the U.S. stock market closure on Monday for Labor Day. The S&P 500 index gained 0.18% to close at 5,601.77 points. The Nasdaq Composite Index rose 0.31% to 17,571.40 points, while the Dow Jones Industrial Average dipped 0.17% to 41,263.32 points.

Eight of the 11 S&P 500 sector indexes advanced, led by consumer discretionary with a 0.83% gain, followed by a 0.24% rise in consumer staples. Nvidia saw a modest rebound of 0.5% after a previous drop, despite delivering positive results and forecasts.

Ulta Beauty slid 4.5% following a downgrade in its annual forecast, citing decreased demand for high-end cosmetics. Intel soared nearly 8% amid speculation of a potential merger. Dell Technologies advanced 3.3% after raising its annual revenue and profit forecasts.

Meanwhile, shares of Trump Media & Technology Group, mostly owned by former President Donald Trump, fell 0.7% to a record low of $3.9 billion in market value. Overall, advancing issues outpaced decliners in the S&P 500 by a narrow ratio. The S&P 500 posted 59 new highs and one new low; the Nasdaq recorded 65 new highs and 68 new lows.

(With inputs from agencies.)