Wall Street closed higher this week, buoyed by investor bets on an imminent Federal Reserve rate cut and strong second-quarter earnings expectations. The S&P 500 gained 0.9% for the week, the Nasdaq rose 0.2%, and the Dow jumped 1.6%. Investors are increasingly confident that the Fed will cut interest rates in September, fueled by recent inflation data showing a surprise fall in consumer prices.
While strong earnings growth is anticipated from tech companies, fueled by the ongoing AI boom, investors are looking for broader economic growth beyond the tech sector. Analyst forecasts suggest a 9.6% jump in S&P 500 earnings for the second quarter, with technology leading the charge. However, sectors like real estate, industrials, and materials are expected to see declining earnings.
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Despite recent positive economic indicators, some concerns remain. Producer prices were higher than expected in June, suggesting potential for continued inflationary pressures. The market is closely watching for signs of broader economic growth to sustain the current positive momentum.