Dow Aims for 8-Day Win Streak as Powell's Dovish Tone Signals Rate Cut

US stocks rose on Friday, driven by Federal Reserve Chairman Jerome Powell's dovish tone, signaling a potential interest rate cut. The Dow Jones Industrial Average is on track to extend its winning streak to eight days ahead of next week's crucial inflation data.

author-image
Trim Correspondents
New Update
Dow Aims for 8-Day Win Streak as Powell's Dovish Tone Signals Rate Cut

Dow Aims for 8-Day Win Streak as Powell's Dovish Tone Signals Rate Cut

US stocks edged higher on Friday, setting the Dow Jones Industrial Average up for a potential eight-day win streak, driven by Federal Reserve Chairman Jerome Powell's dovish tone at last week's policy meeting. This signaled that the next interest rate decision was more likely to be a cut than a hike, soothing market fears after a series of hot inflation readings.

Why this matters: The potential interest rate cut could have a significant impact on the overall economy, influencing consumer spending and business investment decisions. A rate cut could also affect the value of the US dollar and have implications for global trade and markets.

The Dow Jones Industrial Average rose 0.3% to 39,510.71, with the S&P 500 up 0.31% to 5,230.10, and the Nasdaq composite up 0.36% to 16,402.36. Five Federal Reserve officials, including Michelle Bowman, Lorie Logan, Austan Goolsbee, Neel Kashkari, and Michael Barr, are set to speak on Friday, which could move markets.

The upcoming April CPI report, to be released next Wednesday, is expected to show a 0.3% rise in the consumer price index, according to economists. First-quarter earnings results remain top of mind for investors, with 81% of S&P 500 companies beating profit estimates by a median of 8%, and 60% beating revenue estimates by a median of 5%.

Fundstrat's Tom Lee said a light CPI report next week could set the stock market up for more gains in May, highlighting the possibility that auto insurance's disproportionate impact on CPI is ebbing. "This April CPI will highlight the possibility that auto insurance's disproportionate impact on CPI is ebbing," Lee noted.

However, Dallas Fed President Lorie Logan struck a more cautious tone, stating, "There are also important upside risks to inflation that are on my mind, and I think there's also uncertainties about how restrictive policy is and whether it's sufficiently restrictive to keep us on this path."

In other markets, West Texas Intermediate crude oil jumped 0.54% to $79.69 a barrel, while Brent crude rose 0.41% to $84.22 a barrel. Gold edged higher by 1.46% to $2,374.50 per ounce, and the 10-year Treasury yield rose 3 basis points to 4.49%. Bitcoin edged lower by 0.34% to $65,672.

As the market awaits next week's crucial inflation data, the Dow Jones Industrial Average is on track to extend its winning streak to eight days. While Powell's dovish comments have boosted expectations of a potential rate cut, some Fed officials remain cautious about the path ahead for inflation and monetary policy. The upcoming CPI report will provide further clarity on the progress made towards the Fed's 2% inflation target.