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."
Sign up for Kiplinger’s Free E-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
-
Investing Abroad Could Pay Off — Here's HowCountries overseas are stimulating their economies, and their stocks are compelling bargains.
-
Retire in Belize for Stunning Natural Beauty and CultureBelize offers miles of protected land and ocean, a rich mix of cultures and a chill lifestyle. Best yet — the income requirement is just $2K per month.
-
Why Investing Abroad Could Pay Off
Countries overseas are stimulating their economies, and their stocks are compelling bargains.
-
Are These the Next Stocks to Split?Interactive Brokers' recently split its stock to makes its shares more accessible to investors. Could these high-priced stocks be next?
-
Your Home + Your IRA = Your Long-Term Care SolutionIf you're worried that long-term care costs will drain your retirement savings, consider a personalized retirement plan that could solve your problem.
-
I'm a Financial Planner: Retirees Should Never Do These Four Things in a RecessionRecessions are scary business, especially for retirees. They can scare even the most prepared folks into making bad moves — like these.
-
A Retirement Planner's Advice for Taking the Guesswork Out of Income PlanningOnce you've saved for retirement, you'll need your nest egg to support you for as many as 30 years. For that, you need a clear income strategy, not guesswork.
-
Stock Market Today: Stocks Swing as Trump Scraps Canada Trade TalksDespite a mid-afternoon slip, the S&P 500 and Nasdaq ended the day at new record highs.
-
Why Smart Retirees Are Ditching Traditional Financial PlansFinancial plans based purely on growth, like the 60/40 portfolio, are built for a different era. Today’s retirees need plans based on real-life risks and goals and that feature these four elements.
-
To My Small Business: Well, I've Been Afraid of Changin', 'Cause I've Built My Life Around YouWhile thinking about succession planning might feel like anticipating a landslide (here's to you, Fleetwood Mac), there are strategies you can implement to manage the uncertainty and the transition.
