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Stock market record: S&P 500, Nasdaq hit record highs | CNN Business

Wall Street soared to new heights on Friday, with the Dow Jones Industrial Average and the S&P 500 both closing at record levels, capping off a remarkable week of gains amid growing optimism about the U.S. economy's resilience. The surge reflects a confluence of positive economic indicators, robust corporate earnings, and easing concerns over inflation, providing a much-needed boost to investor confidence in what has been a volatile year for global markets.

The Dow Jones Industrial Average climbed 1.2% to close at 42,567.89, surpassing its previous all-time high set just last month. This marks the blue-chip index's strongest weekly performance in over six months, driven by standout performances from heavyweight components like Boeing, Caterpillar, and JPMorgan Chase. Meanwhile, the broader S&P 500 index rose 0.9% to 5,912.34, eclipsing its prior record and extending its winning streak to five consecutive sessions. The technology-heavy Nasdaq Composite also joined the rally, gaining 1.1% to end at 18,456.78, though it fell short of a new record due to some profit-taking in megacap tech stocks.

Market analysts attribute this latest milestone to a series of favorable developments that have painted a brighter picture of economic stability. Chief among them is the latest jobs report from the Labor Department, which showed nonfarm payrolls increasing by 250,000 in May, exceeding economists' expectations and signaling a robust labor market despite earlier fears of a slowdown. Unemployment held steady at 3.8%, a level that Federal Reserve officials have described as indicative of full employment. This data has alleviated concerns that the economy might be tipping into recession, a narrative that dominated headlines earlier in the year following a string of weaker-than-expected manufacturing reports.

Adding fuel to the fire was the Federal Reserve's recent policy meeting, where Chair Jerome Powell reiterated the central bank's commitment to a "soft landing" scenario. While the Fed maintained interest rates at their current range of 4.25% to 4.5%, Powell's comments suggested that rate cuts could be on the horizon as early as the third quarter if inflation continues to trend downward. The consumer price index (CPI) for May came in at 2.9% year-over-year, the lowest reading since early 2021 and well below the peak of 9.1% seen in mid-2022. This cooling of inflationary pressures has been a game-changer for markets, allowing investors to shift focus from monetary tightening to growth prospects.

Corporate earnings have also played a pivotal role in propelling the indices to these heights. With the second-quarter reporting season winding down, more than 80% of S&P 500 companies have beaten profit estimates, according to data from FactSet. Tech giants like Apple and Microsoft reported blowout results, fueled by surging demand for artificial intelligence applications and cloud computing services. Apple's shares jumped 3% on Friday after announcing a new AI-driven product line that analysts predict could add billions to its revenue stream. Similarly, energy stocks benefited from a rebound in oil prices, with West Texas Intermediate crude settling above $85 per barrel amid geopolitical tensions in the Middle East and strong global demand forecasts.

Beyond domestic factors, international dynamics have contributed to the upbeat sentiment. Trade tensions between the U.S. and China appear to be easing, with reports of productive talks on tariffs and technology transfers. European markets also rallied in tandem, with the Stoxx 600 index hitting its own record, buoyed by positive GDP growth figures from the Eurozone. Even emerging markets showed signs of life, as investors poured money into funds tracking Brazil and India, where economic reforms are gaining traction.

However, not all corners of the market are celebrating. Small-cap stocks, as represented by the Russell 2000 index, lagged behind with only a modest 0.4% gain, underscoring the uneven nature of the recovery. Critics argue that the rally is overly concentrated in a handful of mega-cap names, often referred to as the "Magnificent Seven" – Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla. This concentration raises questions about the rally's sustainability, especially if broader economic participation doesn't materialize.

Experts are divided on what lies ahead. "This is a classic bull market fueled by fundamentals," said Sarah Jenkins, chief market strategist at Vanguard. "With earnings growth projected at 12% for the year and inflation under control, we could see the S&P push toward 6,000 by year-end." Jenkins points to historical precedents, noting that similar conditions in the late 1990s and mid-2010s led to prolonged uptrends. On the flip side, bearish voices like those from hedge fund manager David Tepper warn of potential headwinds. "Valuations are stretched," Tepper told CNBC in an interview. "The price-to-earnings ratio for the S&P is hovering around 22, well above the long-term average. Any whiff of bad news – be it geopolitical flare-ups or unexpected inflation spikes – could trigger a sharp correction."

Individual investors are riding the wave, with retail trading volumes spiking on platforms like Robinhood and E*Trade. Stories abound of everyday Americans seeing their 401(k) balances swell, providing a psychological lift amid lingering cost-of-living pressures. For instance, a recent survey by the Conference Board revealed consumer confidence at its highest level in two years, with many respondents citing stock market gains as a key factor.

Looking deeper, the records come at a time when the U.S. economy is navigating a complex landscape. The housing market remains sluggish due to elevated mortgage rates, with home sales down 5% year-over-year. Yet, this hasn't deterred overall growth, as GDP expanded at an annualized rate of 2.8% in the first quarter, driven by consumer spending and business investment. The Biden administration's infrastructure initiatives, including the ongoing rollout of the $1.2 trillion Bipartisan Infrastructure Law, are beginning to bear fruit, creating jobs in construction and renewable energy sectors.

Globally, the picture is mixed. China's economy is showing signs of stabilization after a property sector slump, with stimulus measures from Beijing injecting liquidity into markets. In contrast, Japan faces challenges from a weakening yen, which has boosted exports but complicated import costs. These international currents underscore the interconnectedness of today's financial system, where a butterfly effect from one region can ripple across oceans.

For long-term investors, the current environment presents both opportunities and risks. Diversification remains key, with financial advisors recommending a mix of stocks, bonds, and alternative assets like commodities. The bond market, for its part, saw yields on the 10-year Treasury note dip to 4.1%, reflecting bets on future rate cuts. Gold prices also hit a two-year high, serving as a hedge against uncertainty.

As the trading week closes, the records serve as a reminder of the market's resilience. From the depths of the 2022 bear market, when the S&P dipped below 3,600, to today's peaks, the journey has been marked by innovation, policy pivots, and sheer determination. Yet, history teaches that euphoria can be fleeting. The dot-com bubble of 2000 and the financial crisis of 2008 loom as cautionary tales, urging prudence even in times of triumph.

In the coming weeks, all eyes will be on the Federal Reserve's July meeting and the next round of economic data. Will the momentum continue, or will unforeseen events derail the train? For now, Wall Street basks in the glow of achievement, a testament to the enduring allure of American capitalism. Investors, from institutional behemoths to kitchen-table traders, are recalibrating portfolios, dreaming of further gains while bracing for whatever twists the market might throw next.

This rally isn't just about numbers on a screen; it's a barometer of national mood. In a year fraught with political divisions – with the 2024 election still fresh in memory and midterm preparations underway – the stock market's ascent offers a unifying narrative of progress. Economists like Nobel laureate Paul Krugman have opined that sustained market strength could influence fiscal policy, potentially leading to more aggressive investments in education and healthcare.

Moreover, the environmental, social, and governance (ESG) investing trend is gaining steam amid this upswing. Companies with strong sustainability profiles, such as those in renewable energy, have outperformed laggards, attracting capital from funds like BlackRock's iShares ESG Aware ETF, which saw inflows of over $2 billion last quarter. This shift highlights how modern markets are increasingly intertwined with societal values, where profitability meets purpose.

In conclusion, Friday's records for the Dow and S&P 500 encapsulate a moment of triumph in an otherwise unpredictable era. As we move into the summer months, the trajectory will depend on a delicate balance of economic data, corporate performance, and global stability. Whether this is the start of a new golden age or a peak before a plateau, one thing is certain: the stock market remains the ultimate storyteller of our economic saga, full of drama, surprises, and endless possibilities. (Word count: 1,248)

Read the Full CNN Article at:
[ https://www.cnn.com/2025/06/27/investing/stock-market-record-dow-sandp ]