US stocks opened mixed on Friday evening Beijing time, with the Dow Jones Industrial Average continuing its upward momentum after hitting a record high the previous day. Market participants are closely monitoring sector rotation trends. Federal Reserve official Paulson indicated room for further interest rate cuts.
The Dow rose 93.23 points (0.19%) to 48,797.24, while the Nasdaq fell 103.05 points (0.44%) to 23,490.80. The S&P 500 declined 10.43 points (0.15%) to 6,890.57.
Chipmaker Broadcom saw its shares tumble despite reporting better-than-expected Q4 results and providing strong guidance for the current quarter, including potential doubling of AI chip sales.
Athletic apparel retailer Lululemon's stock surged after announcing its CEO will step down at the end of January. The company's shares have underperformed this year, dropping over 50% year-to-date.
On Thursday, investors rotated into economically sensitive cyclical stocks while taking profits in AI-related growth names. This repositioning followed the Fed's third rate cut of the year on Wednesday.
In the previous session, both the Dow and S&P 500 closed at record highs, while the Nasdaq Composite fell 0.3% as recently high-flying tech stocks like Alphabet and Nvidia retreated.
Chris Zaccarelli, CIO at Northlight Asset Management, noted: "The Dow's exceptional performance could signal the beginning of broader market participation if this trend continues." He added, "The key to sustaining the bull market lies in whether the rest of the market - the so-called 'other 493 stocks' - can advance without reliance on the 'Magnificent 7' tech giants."
For the week, the S&P 500 gained 0.45%, while the Dow rose nearly 1.6%. The Nasdaq was the weakest performer among major indices with less than 0.1% growth. Meanwhile, small caps outperformed large caps, with the Russell 2000 jumping 2.7% this week and hitting a record high on Thursday.
Federal Reserve official Paulson stated there's room for additional rate cuts, identifying unemployment as a significant economic threat.
Philadelphia Fed President Anna Paulson said on Friday she views unemployment as a greater economic risk than inflation, suggesting potential for further monetary easing. Speaking in Delaware, the central banker noted: "This is partly because I believe inflation will likely decline significantly as we move into next year."
As a voting member of the 2026 FOMC, Paulson added that current policy appears "slightly restrictive," hinting at potential accommodation if labor market conditions weaken further. She stated: "Current interest rate levels, combined with the cumulative effects of past tightening, should help return inflation to our 2% target."
Paulson also emphasized monitoring economic growth drivers, noting that productivity gains from AI could provide the Fed flexibility to avoid inflation-fighting rate hikes.
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