Wall Street on Friday posted its best week since mid May. The S&P 500 index notched a new intraday peak and record close for the first time since February. The Nasdaq Composite also achieved both those milestones for the first time since December last year. The sentiment was driven by the end of a 12 day conflict between Israel and Iran, which drove down oil prices and tamed inflation fears. After hovering near record levels on Thursday, the final push for stocks came on Friday following the finalization of a trade agreement between the U.S. and China under which tariff rates will come down, and rare earth exports will be expedited.
And, the central bank unveiled plans to roll back an important capital rule that big banks have to hold more Treasuries. The rule which applies to the largest US banks like Bank of America, JPMorgan and Goldman Sachs. would reduce holding companies’ capital requirement under the ratio to a range of 3.5% to 4.5% from the current 5%.
On the other hand, the third estimate of the U.S. Q1 GDP growth was revised lower and even the hotter than expected core personal consumption expenditures price index reading (an indicator of inflation) could not hold back the run up in the stock market.
For the week, the S&P climbed 3.4%, the Nasdaq Composite surged 4.3%, and the Dow added 3.8%.
Future Wealth’s View
When the markets are ripping and no one really knows why they are moving higher, it is time to look at the facts before throwing more money into the stock market. The fact is that consumers aren’t feeling great. Michigan’s Index of Consumer Sentiment was stuck at one of its worst readings on record for two months this spring, after plunging 29% in the first four months of 2025. It is easy to ignore but dangerous to overlook negative soft indicators like consumer sentiment while trading on hard economic data like jobs and inflation which are holding up.
Another reason for the rally is that while Federal Reserve Chair Jerome Powell gave his semiannual monetary policy report to Congress – where he stuck to a wait and see approach on lowering interest rates, two of the Fed Governors Michelle Bowman and Christopher Waller speculated earlier this week that rate cuts may come as soon as the July Fed meeting. How the Fed will move in July on interest rates will decide the direction of the stock market.
That said, while there’s still plenty of uncertainty in the air, knowing how to capitalize on market rallies is just as important as knowing what to do in a dip.