Pretty much everything rallied on Friday as Wall Street shook off yesterday’s technology stock selloff.
The Dow Jones Industrial Average rose 493 points, or 1.1%. The S&P 500 was up 1%. The Nasdaq Composite was up 0.9%.
The yield on the 2-year Treasury note was down to 3.51%. The 10-year yield was down to 4.06%.
Investors piled into stocks and bonds after New York Federal Reserve President John Williams reignited bets on a December rate cut when he made the case for another cut in the near term. He argued monetary policy was still “modestly restrictive” despite the central bank’s moves to lower rates.
December rate-cut odds surged to 70% on Friday after falling to around 30% earlier in the week, according to the CME FedWatch Tool.
Technology stocks and risk assets started the day moving between positive and negative territory, but Wall Street seemed to finally buy the recent dip as the afternoon rolled on, which helped salvage a bumpy week for the major indexes.
All 11 major S&P 500 sectors were on the rise, and the vast majority of S&P 500 stocks closed higher.
“Whether it’s navigating the AI theme or broader macro influences, our sense is that investor sentiment is best described as ‘exhausted’ as we approach the holiday season,” writes Citi equity analyst Scott Chronert.
He added, “The strong equity move off the April lows, coupled with limited stock price gains despite good earnings, suggests investors may be inclined to secure profits into year-end. While underlying conviction in earnings growth into 2026 is improving, shifting expectations regarding terminal valuations, influenced by the AI dynamic, contribute to this sentiment backdrop.”