Wall Street closed mixed on Friday, driven by tech stocks. The inflation numbers kept investors optimistic about a rate cut from the Fed’s December meeting. One of the three most widely followed indexes closed the session in the green, one closed in the red and one remained virtually unchanged.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) ticked down 86.06 points, or 0.2%, to close at 43,828.06. Seventeen components of the 30-stock index ended in negative territory, while 13 ended in positive.

The tech-heavy Nasdaq Composite gained 23.88 points, or 0.1%, to close at 19,926.72.

The S&P 500 remained virtually unchanged to close at 6,051.09. Eight of the 11 broad sectors of the benchmark index closed in the red. The Communication Services Select Sector SPDR (XLC), the Materials Select Sector SPDR (XLB) and the Energy Select Sector SPDR (XLE) fell 1.2%, 0.9% and 0.5%, respectively, while the Technology Select Sector SPDR (XLK) rose 0.4%.

The fear-gauge CBOE Volatility Index (VIX) decreased 0.8% to 13.81. A total of 12.6 billion shares were traded on Friday, lower than the last 20-session average of 14 billion. Decliners outnumbered advancers by a 2.23-to-1 ratio on the NYSE, while the Nasdaq Composite recorded 75 new highs and 199 new lows.

Investors Widely Expect a Rate Cut in December

With Thursday’s inflation numbers coming in high, market participants continue to widely expect a 25-basis-point (bp) rate cut to be announced from the Fed’s last meeting of the year, set for Dec. 17-18.

Investors believe that the Fed has to gradually reduce the inflation rate while maintaining solid fundamentals to pave the way for a soft landing of the economy. The Fed reduced the market interest rate by 75 bps in September and to a range of 4.5-4.75% in November. A further 25 bp cut would bring the rate down to 4.25-4.50%, 100 bps lower than the highs witnessed from July 2023 to September 2024.

The central bank might be comfortable keeping rates around 4%. This rate range dissuades inflation from re-entering the economy without putting pressure on the labor market. Per CME’s FedWatch tool, market participants currently sense a 95.3% probability that the central back would bring rates down by 25 bps in December. However, they also indicate chances of a pause in January.

Technology stocks continued their upward momentum on Friday, as they did throughout the week. Consequently, shares of Marvell Technology, Inc. MRVL and Palantir Technologies Inc. PLTR rose 2.1% and 3.9%, respectively. Marvell currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

U.S. 10-Year Treasury Yield Hits Three-Month High

The yield on benchmark U.S. 10-year notes rose 7.5 bps to 4.399% from 4.324% late on Thursday.

The yield on the 2-year notes rose 5.9 bps to 4.245%, from 4.186% late in the last session. For the 10-year treasury note, it was the highest yield in almost three weeks and a fifth straight daily rise.

Weekly Roundup

The three most widely followed indexes closed a mixed week, with the S&P 500 falling 0.64% and the tech-focused Nasdaq rising 0.34%. The Dow Jones Industrial Average fell 1.82%. These results were primarily driven by expectations from the Fed based on inflation numbers and the performance of technology stocks, which have continued a positive run over some time now.

No economic data was released on Friday.

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