Nasdaq Extends Advance, Wall Street Logs Weekly Gain Amid Rate Cut Optimism

04:47 PM EST, 12/05/2025 (MT Newswires) -- The Nasdaq Composite extended its winning streak to a fourth straight session on Friday, as Wall Street logged back-to-back weekly gains amid expectations that the Federal Reserve will cut interest rates next week.

The Nasdaq rose 0.3% to close at 23,578.1. The Dow Jones Industrial Average and the S&P 500 each gained 0.2% to end at 47,955 and 6,870.4, respectively. Most sectors finished lower, led by utilities, while communication services saw the biggest gain.

For the week, the Nasdaq advanced 0.9%, the Dow climbed 0.5%, and the S&P 500 advanced 0.3%.

"The Federal Reserve has been blowing hot and cold on a December rate cut over the past month and a half, but momentum is now firmly behind a third 25 (basis-point) easing for the year," said James Knightley, ING chief international economist in New York. "While there is some nervousness about the potential for inflation to remain elevated due to tariff-induced price hikes, the news on the jobs market is increasingly concerning and this has been acknowledged in recent commentary from key centrists who hold sway."

The odds of a 25-basis-point rate cut next week were at 87% on Friday, according to the CME FedWatch tool.

In economic news, US consumer spending growth slowed in September, while the Fed's preferred inflation metric decelerated at the annual level, delayed government data showed Friday.

"Combined with recent weaker employment data, the softer consumer spending and core inflation figures should cement a Fed rate cut next week while keeping the door open for more easing next year," Sal Guatieri, senior economist at BMO Capital Markets, said in a report.

US consumer sentiment picked up after a four-month deterioration, while year-ahead inflation expectations hit the lowest in 11 months, preliminary results from a University of Michigan survey showed.

The outlook for the labor market "improved a touch, but remained relatively dismal," Surveys of Consumers Director Joanne Hsu said.

Jefferies Chief US Economist Thomas Simons said in a note that consumers are likely "somewhat less concerned that tariffs are going to cause another surge in inflation, and some are also probably looking forward to tax refunds in the Spring that are meaningfully larger than they were last year."

US Treasury yields were higher, with the two-year rate increasing 4.2 basis points to 3.57% and the 10-year rate up 4.1 basis points at 4.14%.

In company news, Netflix (NFLX) agreed to acquire Warner Bros. Discovery (WBD) for an equity value of $72 billion in a cash-and-stock deal that the companies said would strengthen the entertainment industry.

Ahead of the deal announcement, Wedbush Securities expressed concerns that a potential Netflix-Warner Bros. transaction may ultimately be blocked by regulators "without clear assurances from the studio side."

Netflix (NFLX) shares fell 2.9%, while Warner Bros. jumped 6.3%.

"Despite our own confidence in Netflix's (NFLX) path to grow organically, investors will debate if this deal is a signal that internally there were more questions about the trajectory of growth ahead," MoffettNathanson wrote in a note.

Victoria's Secret (VSCO) shares surged 18% after the apparel and beauty products retailer raised its full-year guidance amid a strong start to the holiday season and reported better-than-expected third-quarter results.

West Texas Intermediate crude oil rose 0.8% to $60.14 a barrel in Friday late-afternoon trade.

"Stalling negotiations over the Russia-Ukraine conflict, attacks on Russian oil infrastructure, and escalating tensions between the US and Venezuela continued to support prices, but a looming oversupply scenario appears to be base case into 2026," RBC Capital Markets said in a note e-mailed Friday.

Gold was down 0.3% at $4,230.30 per troy ounce, while silver rose 2.5% to $59.91 per ounce.

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