S&P500 and Nasdaq: Tech Stocks Lift US Indices Despite Hot PCE Inflation Data

S&P 500 and Nasdaq Hit Records as Traders Balance Trade Hopes with Inflation Data

Wall Street pushed to fresh record highs Friday, with the S&P 500 closing at 6,173.07 and the Nasdaq reaching 20,273.46, marking their first records in months. The Dow outperformed, gaining 1% to 43,819.27, as traders absorbed mixed signals from US-China trade updates and above-forecast inflation readings. Robust institutional participation was clear with volumes 21% above the 20-day average, confirming resilient risk appetite despite policy uncertainty.

How Did Ongoing US-China Trade Developments Drive Sentiment?

Markets opened higher on optimism around progress in US-China trade talks, including agreements to expedite rare earth shipments ahead of the July 9 tariff deadline. However, sentiment wavered midday as President Trump abruptly ended Canada trade talks over its digital services tax, labeling it an attack on US firms. Despite the setback, buyers stepped in late, with advancing stocks leading decliners on the NYSE, highlighting underlying strength as traders weighed trade optimism against ongoing risks.

Which Sectors and Stocks Led the Breakout?

Communication Services led sector gains as Meta and Alphabet surged, while Technology followed closely with Nvidia and Microsoft hitting new all-time highs, reflecting continued enthusiasm for AI momentum. Nike jumped 15.2% after beating earnings expectations, signaling operational improvement under CEO Elliott Hill despite projected $1 billion in tariff-related costs. Nvidia added 1.8%, moving closer to a $4 trillion market cap, while Micron and EchoStar contributed to the semiconductor and tech-led rally.

Energy lagged with a 3.19% drop as WTI crude fell 12.1% to $65.08, while Real Estate slipped 0.64% under the weight of higher rate expectations. Growth stocks outpaced value, suggesting traders are leaning back into growth leadership as macro conditions evolve.

What Did the Federal Reserve’s Preferred Inflation Gauge Show?

The PCE inflation report showed a mixed picture for the Fed. Core PCE rose to 2.7% annually, above the 2.6% forecast, while personal spending and income both fell unexpectedly, pointing to potential economic softening. Traders maintained expectations for a September rate cut, with fed funds futures pricing in a 76% probability. Treasury yields ticked higher, with the 10-year at 4.29%, reflecting cautious recalibration of rate outlooks.

What Should Traders Watch Heading Into Earnings Season?

Markets enter the summer positioned for further gains, with the S&P 500 and Nasdaq posting strong weekly advances. However, the abrupt Canada trade fallout highlights risks that could affect sentiment. Traders will focus on the upcoming July 9 tariff deadline and second-quarter earnings as the next major catalysts, with the market’s ability to absorb shocks while maintaining new highs supporting a measured bullish bias in the weeks ahead.

More Information in our Economic Calendar.