By Stephen Culp

Wall Street Extends Rally

NEW YORK (Reuters) – Wall Street extended its rally on Friday, setting the S&P 500 and Nasdaq on course for record closing highs as trade deal hopes fueled investor risk appetite and economic data helped solidify expectations for rate cuts from the U.S. Federal Reserve.

All three major U.S. stock indexes advanced and were poised for weekly gains. The S&P 500 and the Nasdaq breezed past previous intraday record highs and headed toward all-time closing highs. The blue-chip Dow remained 2.9% below its record closing high reached on December 4.

“Given the uncertainties in the world at the moment, I am surprised,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “However, one can make the case that the uncertainties are diminishing as the year progresses and that has made people more optimistic about the future.”

“Inflation (is) under control, (it) doesn’t seem like the tariffs have pushed anything up yet,” Tuz continued. “The economy is OK. Seems like there is plenty of money out there to buy things. So why not make an all-time high?”

The Personal Consumption Expenditures report from the Commerce Department showed consumer income and spending unexpectedly contracted in May. And while tariffs have yet to affect price growth, inflation continues to hover above the Fed’s 2% annual inflation target.

A separate report from the University of Michigan confirmed consumer sentiment has improved this month, but remains well below December’s post-election bounce.

Financial markets have priced in a 72% likelihood that the Fed will implement its first rate cut of the year in September, with a smaller, 21% probability of a rate cut coming as soon as July, according to CME’s FedWatch tool.

Washington and Beijing reached an agreement to expedite rare-earth shipments to the U.S., a White House official said, well ahead of the July 9 expiration of the 90-day postponement of U.S. President Donald Trump’s “reciprocal” tariffs.

Additionally, U.S. Treasury Secretary Scott Bessent said the Trump administration’s trade deals with 18 of the main U.S. trading partners could be done by the September 1 Labor Day holiday.

On a less positive note, Trump ended trade negotiations with Canada in response to its imposition of a digital services tax on technology companies.

The Dow Jones Industrial Average rose 329.28 points, or 0.76%, to 43,716.12, the S&P 500 gained 18.12 points, or 0.30%, to 6,159.14 and the Nasdaq Composite gained 36.57 points, or 0.18%, to 20,204.48.

Among the 11 major sectors of the S&P 500, Industrials were enjoying the biggest percentage gain, while energy shares were the laggards.

Chipmaker Micron (NASDAQ:MU) had an upbeat forecast that revived investor confidence in artificial intelligence-related stocks, while Nvidia (NASDAQ:NVDA) rose 1.4%, edging closer to a $4 trillion market capitalization after reclaiming its position as the world’s most valuable company.

Nike (NYSE:NKE)’s shares jumped 15.2% after forecasting a smaller-than-expected drop in first-quarter revenue.

Advancing issues outnumbered decliners by a 1.33-to-1 ratio on the NYSE. There were 318 new highs and 42 new lows on the NYSE.

On the Nasdaq, 2,084 stocks rose and 2,314 fell as declining issues outnumbered advancers by a 1.11-to-1 ratio.

The S&P 500 posted 34 new 52-week highs and 3 new lows while the Nasdaq Composite recorded 89 new highs and 50 new lows.