The market ended the week on a strong note, driven by Wednesday’s Fed rate cut and policy statement. As widely expected, the Fed cut the target range for the federal funds rate by 25 basis points to 4.00–4.25%, leaving markets focused on updated guidance for further easing. Officials remain split on the pace of additional cuts this year: nine project one more, ten forecast two, and one anticipates none. Following the announcement. The market is discounting a 91.9% for a 25-basis point cut in October, with a December rate cut now at 80.6%.
Mega-cap leadership continued to drive broad market gains, with the S&P 500 (+1.2%), Nasdaq Composite (+2.2%), and DJIA (+1.1%) capturing fresh record intraday and closing highs. The Russell 2000 (+2.2%) was a standout, eclipsing its prior intraday record from November 2024 and its record closing high from November 2021, reflecting strong small-cap action driven by the prospect of more interest rate cuts. The Vanguard Mega Cap Growth ETF finished with a 1.1% gain, while the S&P 500 Equal Weight Index (+0.1%) lagged the market-weighted S&P 500.
Sector performance was led by the communication services (+3.4%) and technology (+2.1%) sectors, fueled by gains in Alphabet (GOOG +4.0%) and Apple (AAPL +3.6%). The consumer discretionary sector (+1.5%) also captured a nice gain. In contrast, consumer staples (-1.3%), real estate (-1.4%), and materials (-0.9%) sectors lagged.