NEW YORK — U.S. stocks soared to new record highs on Friday after fresh inflation data showed price growth slowing more than expected, raising hopes that the Federal Reserve could continue cutting interest rates to support the economy.
The S&P 500 rose 0.8%, surpassing its previous all-time high set earlier this month, while the Dow Jones Industrial Average climbed 472 points (1%) and the Nasdaq Composite gained 1.1%, both also reaching record levels.
Economists described the latest inflation figures as “encouraging,” noting that easing price pressures could bring relief to millions of American households still grappling with elevated living costs. More crucially for investors, the report bolstered expectations that the Federal Reserve will maintain its rate-cutting cycle in an effort to stimulate a cooling job market.
“The Fed is now more worried about the labour market than inflation,” said Brian Jacobsen, Chief Economist at Annex Wealth Management. “Without any strong evidence to the contrary, there’s little reason for policymakers to change course.”
The central bank reduced its benchmark rate last month for the first time this year, but had signalled caution on further cuts. Traders, however, are betting almost unanimously that more reductions are coming — including one at next week’s meeting.
The rally marks a dramatic rebound from April’s market lows, when fears of escalating tariffs and slowing global trade unsettled investors. Since then, optimism about lower interest rates and strong earnings from technology giants such as Nvidia and Alphabet have powered markets higher.
Ford Motor Co. led Friday’s gains, jumping 12.2% after posting stronger-than-expected quarterly profits. Intel rose 0.3% on surging demand for artificial intelligence chips, while Google’s parent company, Alphabet, advanced 2.7% following a major AI partnership with Anthropic. Procter & Gamble shares also gained 0.9% after beating profit forecasts despite what CEO Jon Moeller called “a challenging consumer and geopolitical environment.”
Meanwhile, Newmont Mining tumbled 6.2% as investors took profits after a year-to-date rally of nearly 139% driven by gold’s meteoric rise. Analysts cautioned that gold’s recent pullback was inevitable after months of steep gains.
At Friday’s close, the S&P 500 stood at 6,791.69, the Dow at 47,207.12, and the Nasdaq at 23,204.87.
Global markets mirrored the upbeat sentiment, with Japan’s Nikkei 225 up 1.4% and South Korea’s Kospi surging 2.5%. Treasury yields were little changed, with the 10-year yield easing slightly to 3.99%.
A separate University of Michigan survey showed mixed expectations among U.S. consumers regarding future inflation, a key factor the Fed monitors to prevent a potential self-fulfilling inflation cycle.
Despite lingering concerns about government debt — which this week topped $38 trillion — Wall Street’s mood remained buoyant. Investors are betting that slowing inflation, resilient corporate earnings, and a dovish Fed could keep the record-setting rally alive.
