U.S. stock markets closed higher on Friday as tariff-related concerns eased. Moreover, market participants were optimistic about the first interest rate cut of this year in September. All three major stock indexes ended in positive territory. For the last week, these indexes finished sharply higher.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 0.5% or 206.97 points to close at 44,175.61. Notably, 20 components of the 30-stock index ended in positive territory and 10 finished in negative territory. 

The tech-heavy Nasdaq Composite finished at 21.450.02, rising 1% or 207.32 points, backed by the strong performance from big techs. This marks the tech-laden index’s new closing high. During intraday trade, the index recorded a new all-time high of 21,464.53.

The S&P 500 gained 0.7% to finish at 6,389.45. Out of the 11 broad sectors of the broad-market index, nine ended in positive territory while two ended in negative territory. The Technology Select Sector SPDR (XLK), the Financials Select Sector SPDR (XLF) and the Health Care Select Sector SPDR (XLV) advanced 1%, 0.9% and 0.9%, respectively. 

The fear gauge CBOE Volatility Index (VIX) was down 8.6% to 15.15. A total of 16.2 billion shares were traded on Friday, lower than the last 20-session average of 18.3 billion. Advancers outnumbered decliners on the NYSE by a 1.37-to-1 ratio. On the Nasdaq, a 1.13-to-1 ratio favored advancing issues.

Tariff and Trade Policies

On Aug 8, President Donald Trump warned the U.S. judiciary against striking down his tariff policies. Trump posted in Truth Social that any court order against his tariff policies could be disastrous as “It would be 1929 all over again, a GREAT DEPRESSION.”  Trump’s reciprocal tariffs were effective at mid-night Aug 7. Trump also claimed that the imposition of tariffs by his administration would have a “huge positive impact” on the market.

Apple Soars Last Week

Last week, technology behemoth Apple Inc. (AAPL Quick QuoteAAPL - Free Report) recorded its best weekly performance since July 2020. On Aug 6, Apple’s CEO Tim Cook met President Trump at the White House where the company pledged to invest approximately $600 billion in the United States over the next four years. The stock price of Apple soared 13.2% last week. Apple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Interest Rate Cut Expectations

Market participants look increasingly optimistic that the Fed will reduce the interest rate for the first time this year in September. This expectation gathers pace following weak jobs data for July and significantly downwardly revised jobs additions for June and May. 

On Aug 7, President Trump nominated Council of Economic Advisers Chairman Stephen Miran to a short-term Fed board seat. The seat was vacated following Adriana Kugler's sudden exit last week. Stephen Miran, a close associate of the President, is considered Trump’s choice to succeed Fed Chairman Jerome Powell. Notably, Powell’s term ends on May 15, 2026.

The CME FedWatch currently shows a 88.9% probability that the central bank will reduce the benchmark lending rate by 25 basis points in September. This probability was 08.3% last week. The existing Fed fund rate is in the range of 4.25- 4.5%.

Weekly Roundup

Last week was very impressive for Wall Street. The Dow, the S&P 500 and the Nasdaq Composite rallied 1.4%, 2.4% and 3.9%, respectively. Investors appeared to interpret reciprocal tariffs as being less harsh than anticipated. Consequently, confidence in risky assets like equities boosted.