NEW YORK (AP) — Wall Street is coasting toward the finish of its latest record-setting week on Friday.
The S&P 500 edged up by 0.1% and was on track to close out its ninth winning week in the last 10. The Dow Jones Industrial Average was up 17 points, or less than 0.1%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.3% higher.
All three hit all-time highs the day before, as did the small stocks in the Russell 2000 index, which finally surpassed its prior record set in 2021. Stocks have widely been rallying on expectations that the Federal Reserve will continue to cut interest rates in order to give the economy a boost after it lowered them for the first time this year on Wednesday.
FedEx helped keep the market stable after delivering stronger profit and revenue for the latest quarter than analysts expected. It rose 1.4%, thanks in part to strength for its domestic package business. But muted expectations for upcoming results helped keep the stock in check, as analysts said uncertainty around tariffs could weigh on its profits.
Lennar dropped 5% after the homebuilder reported weaker revenue for its latest quarter than analysts expected, even though its profit topped forecasts. Executive Chairman Stuart Miller cited “the continued pressures of today’s housing market.” The company had to offer additional incentives to customers to entice them to buy homes, which dragged down the average sales price.
Easier interest rates could give the struggling housing market a boost, and mortgage rates have already come down in expectation of a rate-cutting campaign by the Fed. Not only that, lower rates could also tamp down widespread criticism that the broad U.S. stock market has become too expensive after prices rose so quickly.
But expectations are so strong for coming cuts to interest rates that the stock market is vulnerable to sharp declines if the Fed does not end up cutting as much as expected.
Fed officials earlier this week lowered the federal funds rate by a quarter of a percentage point and indicated more cuts may be on the way this year and next. They're hoping to give some support to the job market, which has slowed sharply and made it more difficult for U.S. workers to find new positions.
But Fed Chair Jerome Powell also warned Wednesday that the central bank is in a precarious position and may have to change course quickly. That’s because the economy is in an unusual situation where inflation is remaining stubbornly high at the same time as the job market is slowing.
The Fed is in charge of fixing both, but it has only one tool to do so. And helping one by moving interest rates often hurts the other in the short term.
In stock markets abroad, indexes inched higher in Europe following a weaker finish in Asia.
Japan’s Nikkei 225 fell 0.6% after the Bank of Japan said it will sell some of its massive trove of Japanese stock funds. It also held interest rates steady.
Chinese indexes finished mixed ahead of a phone call that began Friday morning between U.S. President Donald Trump and China’s President Xi Jinping on tariffs and a deal to allow TikTok to keep operating in the United States.
In the bond market, Treasury yields held relatively stable. The yield on the 10-year Treasury rose to 4.12% from 4.11% late Thursday.
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AP Writers Matt Ott and Teresa Cerojano contributed.