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S&P 500 heads towards its best first half of the year since 1997

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The broader index S&P 500 fell slightly on Friday after it reached a new record high earlier in the day, and Wall Street ended the week with strong growth.

The S&P 500 ended the session with a fall of 0.13% to 2,950.46 points after reaching a historic peak of 2,964.15 points in the middle of the trading. The index ended the session at a record high on Thursday.

SP500

The blue-chip Dow Jones Industrial Average wiped out 34.04 points of its value and reached a level of 26,719.13 points, while the technology Nasdaq Composite lost 0.24% and ended the day at a level of 8,031.71 points.

The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 4.41% to 15.40.

The main Wall Street reached their peak during the session after the news that Vice President Mike Pence would postpone his statement on Chinese politics against “positive signs” in the trade talks. But the indexes wiped out much of their growth in the last minutes before the closing bell after the ministry of trade banned five more Chinese companies from buying US components without approval.

Despite volatile trading on Friday, Wall Street indexes posted weekly growth, as investors were excited about the possibility the Federal Reserve to lower interest rates in July. The Dow and S&P 500 achieved an increase of over 2% for the week, while Nasdaq Composite jumped by 3%. With the growth of this week, the S&P 500 is up by 17.7% since the beginning of the year and is about to mark its best first half-year since 1997.

Minneapolis Fed President Neel Kashkari, in an essay on the regional bank’s website, wrote that he “advocated for a 50-basis-point rate cut” to bring the benchmark rate to a range at 1.75-2.00%, from the current 2.25-2.50% range. Kashkari isn’t a voting member of the rate-setting Federal Open Market Committee this year.

Federal Reserve Governor Lael Brainard also said that more signs of “downside risks” have emerged over the recent weeks and given these concerns, “basic principles of risk management” in the current environment of low interest rates “would argue for softening the expected path of policy”. Brainard, however, stressed that she would prefer to address financial imbalances by using macro-prudential tools than by using interest-rate policy.

This led investors to price in a 100% probability of a rate cut next month and bolstered equity prices this week.

On the bond markets, yields on 10-year and 30-year US Treasuries rose to 2.057% and 2.587%, respectively.

The most important conclusion this week is the power that central banks still have on the markets, regardless of the cause. The central bank’s announcement on Wednesday also had an impact on other financial markets. The yields on 10-year US government bonds declined to below 2% for the first time since November 2016, and the price of gold has reached its highest level since 2013.

Corporate stocks performance

The chip maker’s stock declined after the ministry of trade’s decision to ban five more Chinese companies from buying US components without approval. The shares of Micron Technology dropped by 2.6%, while Advanced Micro Devices (AMD) lost 3% of its value. Xilinx’s stock also declined by more than 2%.

Among blue-chips UnitedHealth Group Incorporated and Exxon Mobil Corp performed particularly strong, adding 1.83% and 1.39%, respectively. However, Walt Disney Company was the biggest losers in Dow Jones today, wiping out 1.24% of its value.

The shares of CarMax Inc rose to all-time highs, adding 3.13%, amid strong earnings report due to the surge in used-car sales.

Shares of Constellation Brands dropped by 1.1% after the Corona beer maker disclosed that its 35.8% stake of Canopy Group Corp’s fiscal fourth-quarter losses comes to 106 million USD, or 78.2 million ISD after tax benefits. Meanwhile, the shares of Canopy Growth sank 8.1% after the pot company said recreational pot sales in Canada declined from the previous quarter.

Slack Technologies shares fell by 3.6% a day after the enterprise software company’s debut on the New York Stock Exchange. Slack chose to direct list its shares instead of an initial public offering.

The top performers on the S&P 500 were Humana Inc (+4.47%), Baker Hughes (+3.41%) and CarMax Inc (+3.13%), while on the flip side were Carnival Corporation (-4.51%), Altria Group (-4.50%) and Sealed Air Corporation (-4.44%).