The Nasdaq and S&P 500 closed at record highs on Friday. Lululemon’s positive outlook and U.S. job data boosted investor optimism. The data increased hopes that the Federal Reserve may cut interest rates this month.
However, the Dow ended lower due to a significant 5.1% drop in UnitedHealth Group shares.
Consumer Discretionary Sector Leads the Rally
The S&P 500 consumer discretionary index rose 2.4%, reaching an all-time high. Lululemon Athletica saw shares jump by 15.9% after it raised its full-year forecast.
Ulta Beauty also advanced, with its shares climbing 9% following its annual profit forecast increase.
Job growth surged in November, but unemployment increased to 4.2%, signaling labor market easing. Bill Northey from U.S. Bank Wealth Management linked this data to expectations of continued rate cuts.
The Dow Jones fell by 123.19 points, or 0.28%, to close at 44,642.52. The S&P 500 gained 15.16 points, or 0.25%, to end at 6,090.27. Meanwhile, the Nasdaq Composite rose by 159.05 points, or 0.81%, closing at 19,859.77.
The S&P 500 marked its 57th record closing high of 2024. Nasdaq hit its 36th record high for the year.
Market Outlook and Rate Expectations
Following the economic data, U.S. rate futures now reflect a 90% probability that the Federal Reserve will cut interest rates by 25 basis points during its Dec. 17-18 policy meeting. This is up from the previous 72% prediction.
The Fed has already cut rates by 75 basis points since September. Despite this, Fed Governor Michelle Bowman noted that inflation risks remain, suggesting caution on further rate adjustments.
Meta Platforms shares rose by 2.4% after a U.S. appeals court upheld a law requiring ByteDance to divest TikTok by early next year or face a ban.
The Cboe Volatility Index (VIX) dropped 0.77 points to 12.77, marking its lowest since mid-July.
Market breadth showed 354 new highs and 98 new lows on the NYSE. On the Nasdaq, 2,610 stocks advanced, while 1,678 fell.
Trading volume totaled 12.99 billion shares, below the 14.5 billion average from the last 20 trading days.