Dow hits record high as Fed eases interest rates

The Dow Jones Industrial Average recorded a modest gain, closing at a record high on Friday, marking a significant rally for the week following the Federal Reserve's first major easing of interest rate policy in four years.

The 30-stock Dow rose by 38.17 points, or 0.09 per cent, reaching a new closing high of 42,063.36. Meanwhile, the S&P 500 slipped by 0.19 per cent, ending at 5,702.55, and the Nasdaq Composite decreased by 0.36 per cent to finish at 17,948.32. On Thursday, the Dow had already surpassed 42,000, and the S&P 500 climbed above 5,700 for the first time.

Turning to US sectors, all sectors except for Utilities, Communications and Consumer Staples closed lower on Friday. Utilities led the sectors, closing higher by 2.69 per cent. Industrials was the worst performer, closing lower by 0.69 per cent.

In company news, FedEx saw a significant decline of 15 per cent following a sharp drop in quarterly earnings and a lowered full-year revenue forecast, with CEO Raj Subramaniam citing weaker industrial demand and a shift among customers towards cheaper, slower delivery options impacting profits. In contrast, Nike's stock surged over 6 per cent upon announcing a leadership change, with Elliott Hill set to replace John Donahoe as CEO in October, although shares had previously fallen about 25 per cent for the year. Meanwhile, Constellation Energy's shares rose more than 22 per cent after revealing plans to restart the Three Mile Island nuclear plant and enter a 20-year agreement with Microsoft to supply electricity for its data centres.

All three major averages posted weekly gains, with the S&P 500 up 1.36 per cent, marking its fifth positive week in the past six. The index has increased by over 19 per cent in 2024. The Dow closed the week up 1.62 per cent, while the tech-heavy Nasdaq gained 1.49 per cent.

Fed Governor Christopher Waller, commenting on the market's response for the first time since Chair Jerome Powell’s press conference, told CNBC on Friday that inflation is declining faster than anticipated, which led him to support the half-point cut.

Futures

The SPI futures are pointing to a 0.8 per cent fall.

Currency

One Australian dollar at 7.30am was buying 68.07 US cents.

Commodities

Gold added 1.21 per cent. Silver gained 0.26 per cent. Copper lost 0.09 per cent. Oil fell 0.22 per cent.

Figures around the globe

European markets closed lower. London’s FTSE fell 1.19 per cent, Frankfurt lost 1.49 per cent, and Paris closed 1.51 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei gained 1.53 per cent, Hong Kong’s Hang Seng added 1.36 per cent, while China’s Shanghai Composite closed 0.03 per cent higher.

On Friday, the Australian share market closed 0.21 per cent higher at 8209.

Dividends payable
ARN Media Ltd (ASX:A1N)
Embark Early Education Ltd (ASX:EVO)
oOh media Ltd (ASX:OML)
Smartgroup Corporation Ltd (ASX:SIQ)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap, Marketech.

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