Wall Street Surges Amid Speculation of Bigger Fed Rate Cut

Wall Street's main indexes rose on Friday as investors bet on a potential bigger interest rate cut by the Federal Reserve next week. Small-cap stocks outperformed with renewed hopes of a 50-basis point cut. All major indexes were trading near two-week highs, driven by consumer sentiment improvement and sector gains.

Wall Street's main indexes experienced a notable rise on Friday as investors reevaluated the likelihood of a bigger interest rate cut by the Federal Reserve next week. Interest rate-sensitive small-cap stocks outperformed the market, encouraged by a shift in trader bets towards a 50-basis point rate cut, an increase prompted by statements from former New York Fed President Bill Dudley.

Media reports earlier suggested the decision on the size of the cut was finely balanced. Jim Baird, Chief Investment Officer at Plante Moran Financial Advisors, highlighted the emerging discussions within the Fed about leaving 50 basis points on the table, spurring market optimism that a larger cut was possible.

In late trading, the Dow Jones Industrial Average climbed 335.25 points to 41,432.02, the S&P 500 added 33.65 points to 5,629.41, and the Nasdaq Composite rose 118.78 points to 17,688.45. Meanwhile, consumer sentiment showed signs of improvement in September as inflation pressures eased. However, some stocks like Adobe and Boeing saw declines due to specific corporate issues.

(With inputs from agencies.)