Stock Market Today: S&P 500 Eyes Record High as Trade Deal Hopes and Rate Cut Bets Drive Stock Gains

US stocks experienced strong gains on Friday, with major indices all pushing higher as optimism surrounding trade talks and anticipated Federal Reserve rate cuts continued to boost investor sentiment.

The S&P 500 (GSPC) added 0.6%, approaching its first record high since February. The Nasdaq Composite (IXIC) gained around 0.6%, also aiming for a record close, while the Dow Jones Industrial Average (DJI) added nearly 1%, rising over 300 points.

Market Movers:

• Meta (META): +1.5%: Meta's stock rose on Friday during ongoing optimism around its AI-driven growth. The social media giant has seen strong revenue growth this year, especially from its advertising division, and investors are confident it will keep its leadership in the space. The company continues to expand its reach through AI tools, enhancing user engagement and advertising opportunities.
• Microsoft (MSFT): +0.7%: Microsoft climbed as the company stays a key player in the AI revolution. The tech giant's market cap is now nearing $4 trillion, and analysts expect continued strong performance in its cloud and AI sectors. Microsoft continues to dominate the AI space, driving investor optimism.
• Nvidia (NVDA): +1.1%: Nvidia saw another decent rise, extending its recent record highs. As the leading supplier of AI chips, Nvidia continues to be a key beneficiary of the surging demand for AI-driven technologies. The stock surged past its $4 trillion market cap milestone, positioning Nvidia as one of the most valuable companies globally. Analysts remain bullish, with forecasts predicting even higher growth in AI chip demand.
• Amazon (AMZN): +0.5%: Amazon gained modestly as the e-commerce and cloud computing leader saw renewed optimism. With a strong performance from AWS (Amazon Web Services) and its advertising segment, Amazon remains a dominant force in tech. Despite facing some competition from other big tech players, Amazon’s diverse business model keeps it resilient.

Trade Deal Optimism Boosts Market Sentiment

The market received a boost on Friday following news that the US and China have “signed” a trade deal, cementing a truce that was initially struck last month in Geneva. The deal includes provisions for China to deliver rare earth minerals to the US, with both sides agreeing to take down tariffs once the agreement is fully implemented. This news soothed fears of escalating tensions and helped ease worries about prolonged trade disruptions. According to Commerce Secretary Howard Lutnick, the agreement also includes plans to extend the tariff pause beyond July 9, with some major trade talks expected to conclude by Labor Day.

Inflation and Fed Rate Cut Bets

Investors are also closely watching inflation data, which could shape the Federal Reserve's decision on interest rates. On Friday, the Fed’s preferred inflation measure, the Personal Consumption Expenditures (PCE) index, showed price increases accelerated in May, keeping inflation above the Fed's 2% target. The report added fuel to the debate within the central bank about the timing of rate cuts. Despite this, markets are pricing in a possible rate cut as soon as July, with investors reacting positively to expectations of looser monetary policy to address weak economic data.

Looking Ahead

As the market approaches the end of the quarter, all eyes will be on the Federal Reserve's decision-making and future economic reports. Investors are eagerly awaiting further signals from the central bank, especially after recent weaker-than-expected data. The possibility of rate cuts remains a dominant theme, and the upcoming inflation and employment reports will be critical to understanding whether the Fed will take action sooner than expected.

In addition to the Fed, trade talks remain in focus. With the US and China striking a trade deal, investors are optimistic that the worst of the tariff wars might be behind them. However, there is still uncertainty surrounding the details of the deal and its long-term impact on global trade dynamics. Looking forward, investors will continue to weigh these factors as they navigate the remainder of 2025.