S&P 500 ends near flat but index posts biggest weekly gain of year

The S&P 500 ended little changed on Friday, but the index registered its biggest weekly percentage gain of 2024 after the Federal Reserve this week stuck with projections for three interest rate cuts by year’s end.

The Nasdaq ended slightly higher for the day, along with an index of semiconductors. The semiconductor index was also up sharply for the week amid continued optimism over artificial intelligence. The Dow ended lower on the day.

On Friday, consumer discretionary shares edged lower.

Shares of Nike fell 6.9%, a day after the world’s largest sportswear maker warned that revenue in the first half of fiscal 2025 would shrink by a low-single-digit percentage.

Lululemon Athletica shares fell 15.8% after the company forecast annual revenue and profit below expectations.

Earlier in the week, the Fed left rates unchanged but signaled it was still on track for three rate cuts this year.

“The market took that as saying the Fed isn’t your enemy any more, and eventually it is going to be your friend,” said Matt Stucky, chief equity portfolio manager at Northwestern Mutual Wealth Management Company.

Traders now see about a 71% chance of the first rate cut hitting in June versus 56% at the start of this week, according to the CME’s FedWatch Tool.

The Dow Jones Industrial Average fell 305.47 points, or 0.77%, to 39,475.90, the S&P 500 lost 7.35 points, or 0.14%, to 5,234.18 and the Nasdaq Composite gained 26.98 points, or 0.16%, to 16,428.82.

For the week, the S&P 500 gained 2.3% in its biggest weekly percentage advance since mid-December. The Dow climbed 2%, also its biggest weekly gain since mid-December, while the Nasdaq rose 2.9%, its biggest weekly percentage jump since mid-January.

“At some point before too long it wouldn’t be surprising to see a pullback or correction, or even a sideways trading period, after the gains we’ve had since the October lows,” said Michael Sheldon, director at RDM Financial Group at Hightower in Westport, Connecticut.

Among the day’s gainers, FedEx jumped 7.4%, a day after the company beat Wall Street expectations for quarterly profit.

On the flip side, Digital World Acquisition fell 13.7% after shareholders of the blank-check firm voted to approve its merger with former U.S. President Donald Trump’s media and technology company.

Volume on U.S. exchanges was 9.45 billion shares, compared with the 12.34 billion average for the full session over the last 20 trading days.

(Reporting by Caroline Valetkevitch in New YorkAdditional reporting by Bansari Mayur KamdarOf the so-called Magnificent Seven of leading stocks, only artificial intelligence poster child Nvidia managed to gain on the day. The S&P500 lost 1% and the Nasdaq 1.7%, although futures clawed back about a third of that ahead of Wednesday’s bell.

In China and Taiwan, where the “Mag 7” revenue exposure is estimated to be close to 20%, the mood remained edgy after annual government plans were outlined by the National People’s Congress on Tuesday. The CSI300 edged lower again overnight, even though Hong Kong recovered some losses.

Strategists puzzled over how a modest 3% budget deficit target would contain enough of a fiscal boost to meet the government’s ambitious 5% economic growth target for the year.

And yet surging defence spending plans and the NPC report’s removal of language about Taiwan that included the phrase “peaceful reunification” were most jarring to those worried about worsening geopolitics.

litany of criminal charges. Again casting Trump as a threat to American democracy, Biden took the equivalent Democratic party nods and set up what looks to be a re-run of the 2020 election race.

Elsewhere, and possibly partly related to the political uncertainties, gold and bitcoin remained well bid.

Bitcoin suffered vertigo on Tuesday after briefly hitting record highs above $69,000 and retreated sharply in a wild 14% intraday swing. But it was back higher about $66,500 on Wednesday, even if still shy of the new peak.

Gold prices also breached December’s record peak briefly on Tuesday and held most of those gains today.

The dollar index were lower more generally.

With the Bank of Canada expected to leave its policy rate unchanged at 5% later on Wednesday, the focus will be on the accompanying statement as well as Governor Tiff Macklem’s post-decision interview to see if an all-clear on inflation is forthcoming. Canada’s dollar was steady overnight.

Britain’s pound and government bond yields pushed up ahead of finance minister Jeremy Hunt’s annual budget speech. Despite the fragile state of the public finances, Hunt is expected to offer tax cuts to voters ahead of this year’s election - including a reported 2 percentage point cut in social security contributions.