Stocks opened higher Friday and kept climbing into the close as optimism builds ahead of next week's Federal Reserve policy announcement.
The Fed is all but certain to lower the federal funds rate from its current 23-year high when its latest meeting concludes on Wednesday afternoon, with most now bickering between whether it will be 25 basis points (0.25%) or 50 basis points (0.50%).
Current Fed officials are in a blackout period this week, notes Mark Hackett, chief of investment research at Nationwide, but points out that former New York Fed President Bill Dudley threw his support behind a half-percentage point cut on Friday. However, Hackett notes that "the Fed has historically been hesitant to surprise the market," which raises the odds of a quarter-point cut "to avoid alarming markets."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
According to CME Group's FedWatch Tool, futures traders are pricing in a 53% probability for a 0.25% cut and a 47% chance it'll be 0.50%. One day ago, these odds were at 72% and 38%, respectively.
Consumer sentiment improves in August
On today's economic calendar, the University of Michigan said its Consumer Sentiment Index rose 1.6% in September from the month prior. Consumers viewed prices for durable goods as more favorable, says Joanne Hsu, director of the surveys of consumers at the University of Michigan. However, they remain guarded ahead of the November presidential election, she adds.
While consumers' long-run inflation expectations edged up, year-ahead inflation expectations fell for a fourth straight month, hitting their lowest level since December 2020.
Boeing sinks as workers strike
In single-stock news, Boeing (BA) made headlines after the embattled aircraft maker's largest union voted to strike. The roughly 33,000 aircraft assembly workers overwhelmingly rejected a tentative wage-increase contract and walked off the job at Boeing factories near Seattle.
This is just the latest setback for the aerospace firm whose share price has plummeted 40% for the year to date. Today, BA slumped 3.6%, making it the worst Dow Jones stock.
And according to Vertical Research Partners analyst Robert Stallard, the blue chip stock could have further to fall. According to MarketWatch, the analyst says that following Boeing's last worker strike in 2008, its share price fell 33% between the time the strike started and when a tentative deal was agreed upon.
Of course, past price performance is no guarantee of future returns. And Stallard admits that this prior strike overlapped with the Great Financial Crisis. But BA shares were up more than 2% for the week through Thursday's close, so it doesn't seem like Wall Street was pricing in the possibility of a strike, he adds.
Adobe sinks on disappointing revenue outlook
Adobe (ADBE) was another notable loser Friday, sinking 8.5% after the Creative Cloud parent reported earnings. For its fiscal third quarter, ADBE disclosed earnings of $4.65 per share on $5.4 billion in revenue, beating analysts' estimates.
However, the company's fiscal fourth-quarter guidance was below what Wall Street was expecting.
"Adobe continues to experience strong demand for its generative AI offerings across enterprise and individual customers," says William Blair analyst Jake Roberge (Outperform, the equivalent of a Buy). Despite the weak outlook, the analyst remains "positive on the long-term trajectory of the business, especially as it relates to the company’s ability to capitalize on the opportunity with GenAI."
As for the major indexes, the Dow Jones Industrial Average rose 0.7% to 41,393, the S&P 500 added 0.5% to 5,626, and the Nasdaq Composite gained 0.7% to 17,683. All three benchmarks were up between 2.5% and 6% on the week.
Related content
- Kiplinger's Earnings Calendar and Analysis
- 12 Steps to Protect Your Retirement Savings From Market Volatility
- Will the Fed Cut Rates in September? Here's What Experts Predict
-
September Fed Meeting: Live Updates and CommentaryThe September Fed meeting is a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. will do about interest rates.
-
Ask the Editor: Questions on 529 Plan Rollovers to a Roth IRAAsk the Editor In this week's Ask the Editor Q&A, we answer four questions from readers on transferring 529 plan money to a Roth IRA.
-
September Fed Meeting: Live Updates and Commentary
The September Fed meeting is a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. will do about interest rates.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your WalletInterest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
-
I'm a Retirement Planner: These Are Three Common Tax Mistakes You Could Be Making With Your InvestmentsDon't pay more tax on your investments than you need to. You can keep more money in your pocket (or for retirement) by avoiding these three common mistakes.
-
Want to Shave 10 Hours Off Your Workweek? A Startup Expert Shows How AI Can HelpArtificial intelligence is overhauling how companies operate, freeing up entrepreneurs and their workers to skip the menial stuff and get down to business.
-
Dow Gains 617 Points as Rate Cuts Near: Stock Market TodayWednesday's economic data didn't shift Wall Street's expectations that the Fed is preparing for a rate cut at next week's meeting.
-
Hot August CPI Report Doesn't Shift the Rate-Cut Needle: What the Experts SayThe August CPI came in higher than forecast on a monthly basis, but Wall Street still expects a rate cut at next week's Fed meeting.
-
Four Clever and Tax-Efficient Ways to Ditch Concentrated Stock Holdings, From a Financial PlannerHolding too much of one company's stock can put your financial future at risk. Here are four ways you can strategically unwind such positions without triggering a massive tax bill.
-
Beyond Banking: How Credit Unions Serve Their CommunitiesCredit unions differentiate themselves from traditional banks by operating as member-owned financial cooperatives focused on community support and service rather than shareholder profit.
