Wall Street Bounces Back as Dow Leads Charge; Tech Stocks Recover

Wall Street experienced a strong rebound on Friday, with the Dow leading the charge and tech and chip stocks making a comeback after a challenging week. The industrial conglomerate 3M saw a remarkable 19% jump, boosting the Dow to a one-month high after raising its annual adjusted profit forecast.

The Philadelphia SE Semiconductor index was on track to break a three-day losing streak as companies like Nvidia, Marvell Technology, Broadcom, Texas Instruments, and Qualcomm all saw gains of over 1%.

Despite concerns about inflation, economically sensitive small-cap stocks rose, with the Russell 2000 posting its third consecutive weekly gain, marking its best three-week run since August 2022.

With the U.S. prices showing a moderate rise, speculation is growing that the Federal Reserve may begin easing policy as early as September. The central bank’s July monetary policy decision is set for next week, and many analysts believe the Fed may acknowledge more confidence in disinflationary trends.

The market response to this news has been positive, with bets of a 25-basis-point rate cut by the Fed’s September meeting holding steady at around 88%. Traders are also expecting two rate cuts by December.

While the S&P 500 and Nasdaq are on track for a second consecutive week of losses, there is renewed interest in underperforming sectors like mid- and small-cap stocks as early rate cuts seem likely.

Industrials and Materials led gains on the S&P 500 sector indexes, while Energy saw a decline tracking lower oil prices. In earnings news, Deckers Outdoor and Baker Hughes both saw gains after raising profit forecasts and beating estimates, respectively. However, medical device maker Dexcom faced a 42% slump after cutting its annual revenue forecast.

Overall, the market sentiment remains positive, with advancing issues outnumbering decliners on both the NYSE and Nasdaq. The S&P index recorded new highs, while the Nasdaq saw a large number of both new highs and lows.

Investors are eagerly awaiting the Fed’s decision next week and monitoring the ongoing economic data to gauge the future direction of the market.