US Stock Market Hits New Highs Amid Optimism on Trade and Interest Rate Cuts

Wall Street indices hit new highs as investors bet on deeper Fed rate cuts and trade deals. The S&P 500 and Nasdaq Composite rose around 0.4% to new intraday records, driven by expectations of Fed rate cuts and US trade agreements. Nvidia, Amazon, and Apple stocks led gains, while consumer spending fell unexpectedly in May.

Wall Street's main indices surged to new intraday records on Friday, with the S&P 500 and Nasdaq Composite rising around 0.4% to their highest levels ever seen in a single trading day [1]. This momentum was driven by investor optimism about deeper rate cuts from the Federal Reserve and the potential for trade deals with U.S. partners.

The S&P 500 and the Nasdaq Composite both exceeded their previous peaks, which were set in February and December, respectively. The Nasdaq, in particular, is on track for a new bull market, having recovered more than 20% from its trough in April due to the easing of tariff-related turmoil [1].

Key drivers of the market's optimism include the expectation of a dovish Federal Reserve. The Federal Reserve's decision to cut borrowing costs this year has become more likely, with traders now pricing in an 18.6% chance of a rate cut in July, up from 14.5% last week [1]. Additionally, the Commerce Department's report showed a drop in consumer spending in May, but the overall impact on the Fed's decision was minimal [2].

Shares of Nvidia, Amazon, and Apple led the gains, with Nvidia's stock rising 0.7% to a record high, while Amazon and Apple saw increases of 1.8% and 0.9%, respectively [1]. These gains were supported by hedge funds doubling down on Big Tech stocks, signaling strong conviction in AI, cloud, and digital infrastructure plays [3]. Retail investors can mirror these high-conviction bets through tech-heavy ETFs like IVV, VOO, SPY, QQQ, and XLK [3].

Adding to the upbeat mood, Washington reached an agreement with China on expediting rare-earth shipments to the United States, a White House official said, days ahead of the July 9 deadline for Trump's "reciprocal" tariffs [1]. U.S. Treasury Secretary Scott Bessent also stated that the Trump administration's trade deals with other countries could be completed by the September 1 Labor Day holiday [1].

At 09:55 a.m. ET, the Dow Jones Industrial Average rose 262.05 points, or 0.60%, to 43,648.89, the S&P 500 gained 25.52 points, or 0.42%, to 6,166.54, and the Nasdaq Composite gained 79.63 points, or 0.40%, to 20,247.54 [1]. The S&P 500 and the Nasdaq are on track for their best weekly performance in more than a month, while the blue-chip Dow is set for a weekly advance if gains hold [1].

UBS Global Wealth Management raised its year-end target for the S&P 500 to 6,200 from its prior forecast of 6,000, banking on softening trade uncertainty [1]. Nike's shares rose 15.6% after it forecast a smaller-than-expected drop in first-quarter revenue, while retailer Lululemon Athletica and Hoka-owner Deckers Outdoor also saw gains [1].

In conclusion, the market's performance was driven by expectations of Fed rate cuts and trade deals, with tech stocks leading the way. The S&P 500 and Nasdaq hit new highs, while consumer spending fell unexpectedly in May. Investors remain optimistic about the economic outlook, with hedge funds and ETFs reflecting this sentiment.

References:

[1] Reuters. Wall Street indexes hit new peak on trade-Fed cut optimism. Marketscreener. Retrieved from https://www.marketscreener.com/quote/currency/EURO-US-DOLLAR-EUR-USD-4591/news/Wall-Street-indexes-hit-new-peak-on-trade-Fed-cut-optimism-50352190/
[2] Newsmax. Consumer spending in inflation. Newsmax. Retrieved from https://www.newsmax.com/finance/streettalk/consumer-spending-inflation/2025/06/27/id/1216710/
[3] Benzinga. Nvidia, Amazon, Tesla among tech stocks hedge funds are piling into. Benzinga. Retrieved from https://www.benzinga.com/etfs/sector-etfs/25/06/46098656/nvidia-amazon-tesla-among-tech-stocks-hedge-funds-are-piling-heres-how-etfs-like-ivv-spy-voo-are-riding-the-wave