The stock market fell on Friday as investors monitored developments in the Middle East and evaluated potential future interest rate cuts by the Federal Reserve. The S&P 500 declined 0.22% to end at 5,967.84, marking its third consecutive losing session. The Nasdaq Composite dropped 0.51% to settle at 19,447.41, while the Dow Jones Industrial Average ticked up 35.16 points, or 0.08%, closing at 42,206.82.
Chip stocks came under pressure following a report by The Wall Street Journal regarding potential U.S. restrictions on some semiconductor manufacturers. Several chip stocks saw notable declines: Intel was down more than 1%, while Nvidia slid nearly 2%. The S&P 500 started the trading session higher after Federal Reserve Governor Christopher Waller hinted that rate cuts could be imminent.
“I think we’re in a position that we could do this as early as July,” Waller said. However, Fed Chair Jerome Powell previously emphasized that the central bank would remain data-dependent and wasn’t in a hurry to cut benchmark rates, especially considering the economic uncertainties introduced by President Donald Trump’s tariffs. On the geopolitical front, tensions around the Israel-Iran conflict remained heightened.
Israeli Prime Minister Benjamin Netanyahu reportedly ordered Jerusalem’s military to strike “strategic targets” in Iran. Meanwhile, President Trump is contemplating direct U.S. involvement. The White House indicated that a decision could be forthcoming.
Sam Stovall, Chief Investment Strategist at CFRA Research, noted, “With so much uncertainty going on in this world, who really wants to go long over the weekend?” He also mentioned that the S&P 500 is still trading just around 3% below its recent 52-week high, calling prior highs “rusty doors” that require several attempts before opening. For the week, the S&P 500 was about 0.2% lower. The Dow eked out a 0.02% gain, while the Nasdaq advanced 0.2%.
Several stocks reached new milestones on Friday, with some hitting all-time highs since their respective IPOs.
Investors monitor geopolitical and market risks
However, other stocks like Molson Coors and Constellation Brands hit new 52-week lows.
The Federal Reserve’s annual stress test is expected to be less strenuous this year compared to 2024, according to Morgan Stanley. Analyst Betsy Graseck noted, “We think this year’s test should result in lower drawdowns in CET1 [Common Equity Tier 1] ratios versus 2024 for most banks.”
Ether ETFs are gaining traction, marking their sixth consecutive week of inflows. While these funds have had spikes in inflows, they’ve trailed behind bitcoin ETFs in both inflows and investor attention, amassing about $3.9 billion since their introduction in July 2024.
JPMorgan has recommended buying the dip in Arista Networks, despite its underperformance this year amid concerns over artificial-intelligence landscape competition, particularly from Nvidia and Celestica. Analyst Samik Chatterjee noted that Arista is well-positioned to maintain its market share in the AI networking market. Shares of Circle continued to climb after the Senate passed its proposed stablecoin legislation, the GENIUS Act, which now heads to the House of Representatives.
Circle’s stock rose 18%, adding to a week where it increased by more than 77%. The biggest market movers midday included GXO Logistics, which popped more than 11% after the company raised its full-year earnings outlook and appointed Patrick Kelleher as CEO. CarMax shares jumped 6% following first-quarter results that exceeded analyst expectations.
GMS Inc., a building products stock, surged 26% amid a bidding war between entities including Home Depot. Building stocks rose amid a reported bidding war for GMS Inc. Late Wednesday, an all-cash offer of $95.20 per share for GMS was made, and new reports indicate additional offers are being considered.
Shares of GMS surged 28% on Friday, with stocks of other building-related companies also seeing gains. The market remains volatile as it navigates between geopolitical tensions and potential moves by the Federal Reserve. Investors will continue to watch these developments closely in the coming weeks.
