U.S. markets and stock ETFs pushed to new record highs Friday on rising optimism that the Federal Reserve will cut interest rates later this month.

On Friday, the Invesco QQQ Trust (NASDAQ: QQQ) increased 0.4%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) gained 0.6% and SPDR S&P 500 ETF (NYSEArca: SPY) rose 0.2% as the Dow Jones Industrial Average trade above 27,000 for the first time from the previous session and the S&P 500 hovered above 3000.

The markets were reassured after Federal Reserve Chairman Jerome Powell all but guaranteed the central bank would cut interest rates as soon as later this month, the Wall Street Journal reports.

“Interest rates are low and they probably will remain lower for longer,” Christopher Peel, chief investment officer at Tavistock Wealth, told the WSJ.

Earlier in the week, Powell said the economic outlook had not improved, hinting at interest-rate cuts ahead. He told Congress that the U.S. economy was still under threat from disappointing factory activity, tame inflation and a prolonged trade war and that the central bank was ready to “act as appropriate”, Reuters reports.

“My belief on why the Fed will likely lower rates in the July meeting is that it will try to assume its responsibilities as the central bank for the world and global economic indicators are not as healthy as in the U.S.,” James Abate, chief investment officer at Centre Asset Management, told Reuters.

However, Abate warned that most of the positives have been priced in and the focus will shift to the earnings season in the next few weeks.

According to Refinitiv IBES data. S&P 500 companies are expected to report a 0.4% drop in profits year-over-year. Investors will get a better glance at how the U.S.-China trade war has affected corporate earnings after transport companies report results next week.

For more information on the markets, visit our current affairs category.

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