The Nasdaq Composite (NASDAQ: QQQ) rose to a fresh high on Friday as a weakening labor market and low inflationary pressures were seen as signs the Federal Reserve will lower interest rates next week.
The tech-heavy index climbed 0.45% on Friday to settle at 22,141.10, uplifted by a surge in growth stocks. The Dow Jones Industrial Average (NYSE: DIA), meanwhile, fell over 270 points to close at 45,836.43 and the S&P 500 Index (NYSE: SPY) slipped below the flatline to end the session at 6,584.29.
Despite the session's weakness for the broader market, the S&P 500 rose 1.7% for the week for its best weekly performance since August, while the Dow posted its first positive week in three, gaining about 1%. The Nasdaq outperformed its market peers, advancing over 2% for its second consecutive winning week.
Market participants are currently pricing in a more than 96% probability the central bank will reduce its benchmark interest rate by at least 25 basis points at its upcoming meeting Sept. 16-17, according to CME Group's FedWatch tool. The widely anticipated outlook was built on a string of recent labor market data showing weakness in the economic sector, while recent inflation data showed consumer prices rising, offering signs that President Donald Trump's tariff policies are beginning to impact the broader economy.
On the economic front, the University of Michigan's preliminary consumer sentiment reading on Friday showed overall sentiment decline 4.8% month-to-month to 55.4 in September, marking the lowest reading since May. The headline index was also down more than 20% from a year ago.
Beneath the headline, one-year inflation expectations rose by 4.8% in the front half of September compared to remaining unchanged in August, with consumers emphasizing concerns over Trump's tariffs.
"Consumers continue to note multiple vulnerabilities in the economy, with rising risks to business conditions, labor markets, and inflation," said Joanne Hsu, director of the Survey of Consumers, in a statement. "Likewise, consumers perceive risks to their pocketbooks as well; current and expected personal finances both eased about 8% this month."
In the news, crypto exchange Gemini Space Station (NASDAQ: GEMI) popped 32% about its initial public offering price of $28 per share in its Nasdaq debut on Friday. The firm led by Tyler and Cameron Winklevoss raised $425 million in its IPO, bringing its valuation to about $3.3 billion.
"The market sentiment is incredible," Chief Operating Officer Marshall Beard told YahooFinance on Friday. "I think with the regulatory landscape, especially here in the United States, being very positive for the crypto industry, folks are excited. Folks are building projects again, they're launching new things. More people are coming into the industry."
On the earnings front, Adobe (NASDAQ: ADBE) reported better-than-expected fiscal third-quarter earnings, with the design software maker pointing to its artificial intelligence integration as the main driver of revenue growth.
For its fourth quarter, Adobe expects adjusted earnings per share to be between $5.35 to $5.40 on a revenue range of $6.08 billion to $6.13 billion. For its fiscal year, the company calls for annualized revenue for its digital media business to rise 11.3%.
"Our AI-influenced ARR has now surpassed $5 billion, up from over $3.5 billion exiting fiscal year 2024 and we have already surpassed our full year AI-first ending ARR target," CEO Shantanu Narayen told analysts during the company's earnings call.
Shares of RH (NYSE: RH) fell on Friday after the luxury furniture maker's second-quarter earnings missed Wall Street expectations. The company also lowered its full-year revenue forecast to a new growth range of 9% to 11% from its previous 10% to 13%, with CEO Gary Friedman writing in a letter to shareholders that the new outlook "reflects a $30 million cost of incremental tariffs, net of mitigation, in the second half."
Friedman also warned of "significant inflation that we believe will start to become evident in the second half of this year and accelerate into 2026 and beyond."
Looking ahead, nearly all market moves depend on the Fed's decision next week, as all three major averages remain at or near record levels. Key earnings reports slated to release next week include General Mills (NYSE: GIS) on Wednesday, and FedEx (NYSE: FDX), Lennar Corp (NASDAQ: LEN) and Darden Restaurants (NASDAQ: DRI) on Thursday.