Wall Street staged a solid recovery on Friday as investors warmed again to the prospect of another US interest rate cut this year. The Dow Jones Industrial Average jumped 1.08% or 493 points, while the S&P 500 rose nearly 1% and the Nasdaq added 0.88%. The move followed comments from New York Federal Reserve President John Williams, who indicated that monetary policy remains only modestly restrictive and could be eased further to bring settings closer to neutral. Traders reacted swiftly, pushing the implied probability of a December rate cut to more than 70%, up sharply from below 40% a day earlier.
Rate-sensitive stocks lead Wall Street’s late-week rally
Lower-rate beneficiaries drove much of the rebound, with Home Depot, Starbucks and McDonald’s among the strongest performers. Investors are increasingly hopeful that easier policy could revive a slowing US economy and help justify elevated valuations in the technology sector. The recovery comes after a sharp reversal earlier in the week when the Dow swung more than 700 points in intraday trading but ultimately finished lower as enthusiasm around Nvidia’s blockbuster earnings faded. Nvidia still ended Thursday down more than 3%, contributing to heavy weekly losses across the major indices. The S&P 500 and Dow each fell roughly 2% for the week, while the Nasdaq slid 2.7%.
Bitcoin hit hard as risk sentiment weakens
The risk pullback was also evident in digital assets. Bitcoin fell more than 2% on Friday and is down nearly 11% over the week, retreating to levels last seen in April. The cryptocurrency has dropped almost 25% this month as investors have rotated out of speculative positions and into more defensive assets. Analysts describe the broader sell-off as part of a seasonal, post-earnings valuation reset, with the more inflated corners of the market under the most pressure.
ASX set for a strong open
The Australian market is poised to bounce sharply at the open, with ASX 200 futures up 92 points, or 1.1%, to 8519. Attention now shifts to Wednesday’s monthly CPI release, which has become the official inflation gauge. Economists expect a 0.1% rise for October, with annual inflation forecast to lift to around 3.9% from 3.5%.
