The Dow Jones Industrial Average soared Friday on the back of gains in Home Depot and Caterpillar as investors started to embrace some stocks outside of the technology bull market leaders this week.
The Dow added 247.15 points, or 0.62%, to end at 40,000.90. During the session, the 30-stock blue-chip index rose to a fresh all-time high of 40,257.24. This was its first time above 40,000 since topping that round number milestone in late May. Home Depot added 1.7% to bring its gain for the week to 7.5%. Caterpillar added nearly 1.4% during the day.
The S&P 500 was higher by 0.55%, closing at 5,615.35. The Nasdaq Composite was up 0.63%, ending at 18,398.45.
During Thursday’s session, the S&P 500 posted its worst day since late April as investors sold their Big Tech winners in a major market rotation, pushing Nvidia lower by 5.6%. However, the 30-stock Dow was the outperformer that day, inching higher by 0.08% during the sell-off in the other major averages. On Friday, investors piled into the Dow’s industrial names on hopes slowing inflation would be followed by a Federal Reserve rate cut in September. The Dow advanced 1.6% for the week. The catalyst was a Thursday report showing the consumer price index declined 0.1% in June.
“The powerful growth story in AI has been all-consuming, but it’s not the only story in the market,” said David Russell, global head of market strategy at TradeStation. “Powell’s testimony this week and the CPI report remind investors that other catalysts can boost other kinds of companies. That’s especially true for a sector like utilities, which emerged as an AI play earlier this year and now can potentially benefit from rate cuts.”
The Russell 2000 Index jumped 6% for the week after a 1.1% gain on Friday as investors see a so-called soft landing for the broader economy giving a boost to smaller companies.
The market rallied even after meager reactions to banks’ second-quarter earnings. JPMorgan shares were 1.2% lower even as the bank posted second-quarter revenue higher than Wall Street expectations on a jump in investment banking fees. Citi dipped 1.8% despite beating on the top and bottom lines in the second quarter.
Wells Fargo shares tumbled 6% after the bank said net interest income, a key measure of lending profitability for banks, fell short of expectations in the second quarter.
A reading of wholesale inflation came in slightly hotter than expected on Friday, but Wall Street largely ignored those figures after Thursday’s more important consumer prices report showed slowing inflation.
Nvidia bounced 1.4% on Friday as investors couldn’t resist some of their favorite tech names that had sold off the day before.
The S&P 500′s nearly 18% gain for the year has largely been led by technology stocks. The tech sector has jumped 33% in 2024, and communication services is up 26%. No other major sector is outperforming the benchmark.
