Wall St hits intraday records as AI boost, cooling job market firm rate-cut bets

NEW YORK: Wall Street’s main indexes hit record intraday highs on Friday, driven by AI optimism and signs of a cooling labor market that strengthened the case for interest-rate cuts and put them on track for weekly gains.

The stock moves underscored a relentless equities rally despite the federal government shutdown stretching to a third day and clouding visibility into economic data.

Enthusiasm around AI has helped underpin sentiment this week and markets have also historically shrugged off shutdowns.

However, some analysts warned a prolonged impasse could weigh on the economy.

“The longer the shutdown drags out, the greater the potential for lost output and consumption thanks to the disruption in activity,” said Garrett Melson, portfolio strategist at Natixis Investment Managers.

A survey by the Institute for Supply Management showed the services employment index contracted for the fourth consecutive month. A weak stand-in for the Labor Department’s nonfarm payrolls report, the survey is nonetheless gaining prominence amid a data blackout caused by the shutdown.

“We may be flying blind for the foreseeable future as far as official government data goes, but the mosaic continues to confirm the growing downside risks to the labor market,” Melson said.

Bank of America Global Research also pulled forward its forecast for the next rate cut to October from December.

At 11:51 a.m. the Dow Jones Industrial Average rose 429.83 points, or 0.92 percent, to 46,949.30, the S&P 500 gained 30.27 points, or 0.45 percent, to 6,745.67, and the Nasdaq Composite was up 52.20 points, or 0.23 percent, to 22,896.25.

The small-cap Russell 2000 index also hit an intraday record high and was last up 1.4 percent.

The S&P 500 tech sector rose 0.4 percent, while healthcare added 1.4 percent and was on track for its best week since June 2022.

Communication services shares on the S&P 500 fell 0.55 percent, dragged by losses in Meta Platforms and Alphabet, which were down 1.55 percent and 0.5 percent, respectively.

A gain in banks such as Goldman Sachs and JPMorgan, which rose 1.5 percent and 0.7 percent, respectively, boosted the Dow.

Chicago Fed President Austan Goolsbee said he was hesitant to commit to a series of rate cuts with inflation still running above the target.

Investors will also scrutinize comments from Dallas Fed President Lorie Logan and Fed Vice Chair Philip Jefferson later in the day.

In corporate news, Applied Materials fell 2.7 percent after the chip-equipment maker forecast a USD600 million hit to fiscal 2026 revenue on broader semiconductor export curbs.

Shares of USA Rare Earth hit a record high and were last up 18.4 percent after CEO Barbara Humpton told CNBC the company was “in close communication” with the White House.

BlackRock-owned Global Infrastructure Partners is in talks to acquire Macquarie-backed Aligned Data Centers in a deal that could value the company at USD40 billion, Reuters reported, highlighting the clamor around AI infrastructure.

Advancing issues outnumbered decliners by a 2.52-to-1 ratio on the NYSE and by a 2.24-to-1 ratio on the Nasdaq.

The S&P 500 posted 37 new 52-week highs and one new low, while the Nasdaq Composite recorded 141 new highs and 19 new lows.