S&P 500 retreats after notching its first record since April
Minneapolis Fed President Kashkari advocates for a 50-basis point interest-rate cut
June Flash manufacturing PMIs were the worst since September 2009; services were the worst since 2016
Stocks finished lower Friday amid heightened tensions between Iran and the U.S. but the Dow is on track for its best June in eight decades as investors cheered the Federal Reserve’s shift to a more dovish stance.
Friday was also quadruple witching day—the simultaneous expiration of single-stock options and single-stock futures as well as index options and index futures which is often associated with volatile markets or higher trading volumes.
The S&P 500 index SPX, +0.58% fell 3.72 points, or 0.1%, to 2,950.46, a day after the large-cap index finished at a record. The Dow Jones Industrial Average DJIA, +0.28% lost 34.04 points, or 0.1%, to 26,719.13. The blue-chip index had at one point in the session moved above its closing high set on Oct. 3. The Nasdaq Composite Index COMP, +0.48% shed 19.63 points, or 0.2%, to 8,031.71.
All three main benchmarks are also up for a third week in a row with the S&P 500 gaining 2.2%, the Dow climbing 2.4%, and the Nasdaq adding 3%, according to FactSet.
And if the market can defend its month-to-date gains next week, the Dow is poised for its strongest June performance since 1938 while the S&P 500 could have its best June since 1955. For the Nasdaq, it could be its biggest June jump since 2000.
Suggestions made by Fed Chairman Jerome Powell on Wednesday that the central bank would be willing to cut benchmark interest rates has buoyed financial markets. Investors are betting that monetary policy makers can orchestrate a soft landing for an economy that has shown some signs of stress from sluggish economic growth abroad and a prolonged tariff dispute between the U.S. and China.
“The dovish update from the Federal Reserve on Wednesday propelled stocks higher yesterday, and the feel goof factor is still doing the rounds,” wrote David Madden, market analyst at CMC Markets.
On Friday, Fed Vice Chairman Richard Clarida affirmed remarks made by Powell, saying that the case for accommodative policy has increased.
St. Louis Fed President James Bullard, the lone dissenter among voters in Wednesday’s decision to hold rates steady, said he wanted to cut interest rates this week to guard against an outlook of slowing growth and weak inflation.
Minneapolis Fed President Neel Kashkari, in an essay on the regional bank’s website, wrote that he “advocated for a 50-basis-point rate cut” to bring the benchmark rate to a range at 1.75% to 2%, from the current 2.25%-2.50% range. Kashkari isn’t a voting member of the rate-setting Federal Open Market Committee this year.