The final trading session of the week promises moderate optimism. While the Federal Reserve is keeping silent ahead of the policy meeting and the economic calendar is empty, Wall Street is in a wait-and-see mood. The benchmark stock indices are on track to conquer one-year highs. Analysts are trying to puzzle out whether the market has already entered the bullish trend.

Despite cautious sentiment and a quiet session ahead of the crucial US CPI and the Fed’s policy meeting next week, the major stock indices closed with confident gains.
The Dow Jones climbed by 168 points or 0.5%. The Nasdaq closed 1.02% up. The S&P 500 rose by 0.62% to close at 4,293.
The stock indices traded sluggishly and mixed in the New York pre-market. The S&P 500 is expected to trade in the intraday corridor between 4,270 and 4,340.
US stocks closed in the green yesterday as Fed’s policymakers did not make any hawkish comments. While investors are sitting on the sidelines of the crucial event next week, the stock indices received a boost from a rally in high-tech stocks.
The Nasdaq and the S&P 500 notched one-year highs on the back of a rally in the companies with mega capitalization. The rally was driven by AI, upbeat revenues, and expectations of a pause in the Fed’s rate hikes.
The greed and fear index known as VIX fell to a new record low after the pandemic. Yields of two-year Treasuries which are oftentimes seen as a barometer of interest rates expectations declined to 4.51% from a one-week high.

Treasury yields went down in light of a weekly update on US initial unemployment claims which surged to the highest level since October 2021. The number of claims has been growing for three weeks in a row.
The US Labor Department is due to release the CPI on June 13, on the first day of the Fed’s policy meeting. Consumer prices are expected to dip in May while the core CPI is likely to remain at the same level.
Meanwhile, a rise in tech stocks and heavyweights helped the major stock indices bounce back on the back of low trading volumes. Heavyweight Amazon closed 2.49% up. Nvidia and Tesla shares rose by 1.55% and 4.58%.
GameStop shares tumbled by 17.8% as billionaire investor Ryan Cohen took over as executive chairman after the video game retailer ousted its CEO and posted a bigger-than-expected quarterly loss.
Adobe shares jumped by 4.95% after Piper Sandler raised its share price target to 500 dollars. Software maker Photoshop said it offered its Firefly artificial intelligence tool to major companies.
Among the S&P's 11 major sectors, the consumer sector was in the lead, while real estate and energy stocks declined, with the latter hurt by falling oil prices.
Futures for US stock indexes traded mixed on Friday, and some market participants sensed the signs of recovery in the US stock market. The reason is that the underlying S&P 500 has posted a 20% rally since the October 12 low, suggesting a bull market.
The belief in a bull market is cemented by the combination of a tech boom and the AI-based resilience of corporate earnings and employment as well as the outlook for central bank interest rate peaks. Hence, investors are shifting focus back to stocks.
The market cheered up data from China provided on Friday. Annual factory prices dropped by a whopping 4.6% in May, the fastest pace in seven years. China’s annual consumer inflation rate was just 0.2%, lower than expected.
Along with easing pressures in the supply chain and an annual fall in crude oil prices of about 40%, it was enough to revive hopes that monetary tightening by major central banks has picked up steam and no further extreme action is needed.
FedFunds futures offer only a one in four chance that the Fed will raise interest rates again next week, preferring a final hike in July. The Bank of Japan is expected to maintain its ultra-easy monetary policy. The European Central Bank is expected to raise interest rates by another quarter of a point.
In this context, the market has almost completely ignored the hawkish statement of the IMF, which on Thursday urged the world's central banks to "keep the course" in monetary policy and remain vigilant.

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