Stock Market Today: Widespread Wall Street Rally Lifts Stocks Big and Small

NEW YORK — U.S. stocks were nearly unanimously higher on Friday, ending a difficult week that saw wild swings that divided the market.

The S&P 500 rose 0.9% in morning trading after stronger-than-expected earnings reports from 3M and several other major companies. The Dow Jones Industrial Average was up 602 points, or 1.5%, as of 10:30 a.m. ET, and the Nasdaq Composite was up 0.7%.

Broad-based gains across all market sectors

Gains were broad-based across the board, including both Big Tech giants and smaller stocks. That’s a departure from much of a week that saw a deepening divide between a handful of elite stocks that dominated the market earlier this year and nearly everyone else.

Nvidia rose 1.2%, narrowing a 4.8% loss for the week. Most other members of a small group of stocks known as the “Magnificent Seven” also rose to recoup some losses from earlier in the week.

They came under pressure after recent financial results from Tesla and Alphabet raised concerns that investors had been carried away by the AI ​​craze and had inflated the price of Magnificent Seven shares.

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Smaller stocks and industrials are gaining value

As those old leaders of the market leaderboard fell, formerly battered areas of the market rose and continued their momentum Friday. The Russell 2000 index of smaller stocks rose 1.3%. It is up more than 10% this month, far outpacing the small decline in the larger stocks in the S&P 500.

Industrial companies and other businesses whose profits are closely tied to the strength of the economy also rose. They had lagged this year as high interest rates weighed on the U.S. economy and slowed its growth.

Norfolk Southern jumped 11% to erase a loss so far this year after the railroad reported a better-than-expected profit for its latest quarter, boosted by insurance payouts related to last year’s devastating East Palestine derailment. The company also made progress in cutting expenses and improving efficiency.

3M rose 17.4% after reporting stronger profit and revenue for the latest quarter than analysts expected. The company behind the Scotch-Brite and Nexcare brands also raised the lower end of its full-year 2024 profit forecast range.

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Inflation update improves market sentiment

Stocks rose on the latest inflation data, which investors took as further evidence that their expectations of upcoming interest rate cuts will prove true.

U.S. consumers paid 2.5% higher prices in June than a year earlier, compared with May’s 2.6% inflation, the Commerce Department said Friday. That’s according to an index of consumer spending that the Federal Reserve pays more attention to than the consumer price index, or CPI.

With inflation rising after a discouraging start to the year, traders are still betting on a 100% chance that the Fed will start cutting its key interest rate in September, according to CME Group data. The Fed has kept the federal funds rate at its highest level in more than two decades for about a year.

“Income growth is slow, spending growth is moderate, commodity prices are deflationary, services inflation is moderate,” said Brian Jacobsen, chief economist at Annex Wealth Management. “If that doesn’t give the Fed the confidence to cut, nothing will.”

The yield on the 10-year Treasury note fell to 4.20% after the inflation report from 4.25% on Thursday evening and from 4.70% in April. That’s a significant move for the bond market and support for stocks.

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Significant stock market results

Among other winners on Wall Street, where nearly 90% of stocks in the S&P 500 rose, Deckers Outdoors rose 9.1% after beating Wall Street earnings expectations with its Ugg and Hoka footwear brands. The California company also raised its full-year profit forecast.

Shares of Newell Brands jumped 36.6% after the owner of the Coleman brand of camping gear and Sharpie markers easily beat analysts’ profit forecasts.

Among the relatively few stocks that fell was DexCom, down nearly 40%. The diabetes care company reported a larger-than-expected profit in its latest quarter, but its revenue fell short of analysts’ expectations. It also missed its revenue forecast for the current quarter.

In overseas stock markets, stocks were higher in most of Europe and Asia. Japan’s Nikkei 225 was an exception, falling 0.5% amid expectations that the Bank of Japan could raise interest rates at a policy meeting next week.