S&P 500 and Nasdaq Set Record Highs, Lululemon Shares Surge, Data Fuels Rate Cut Hopes

The Nasdaq and S&P 500 closed at record highs on Friday, driven by optimistic forecasts from Lululemon Athletica and other companies, as U.S. jobs data bolstered expectations for an interest rate cut by the Federal Reserve later this month.

While the Dow ended lower, weighed down by a 5.1% drop in UnitedHealth Group shares, the S&P 500's consumer discretionary sector surged 2.4%, with Lululemon leading the charge, up 15.9% after raising its full-year forecast. Ulta Beauty also rose 9% after raising its annual profit outlook.

The November U.S. jobs report showed strong job growth, but the unemployment rate climbed to 4.2%, signaling a softening labor market. This has led analysts to speculate that the Fed may continue reducing rates in December and into the first quarter of 2025.

Traders at work on the floor of the New York Stock Exchange.

The Dow dropped by 123.19 points (-0.28%) to 44,642.52, the S&P 500 gained 15.16 points (+0.25%) to 6,090.27, and the Nasdaq rose 159.05 points (+0.81%) to 19,859.77.

The Nasdaq posted its 36th record high for 2024, while the S&P 500 marked its 57th. For the week, the Nasdaq gained 3.3%, the S&P 500 rose 1%, and the Dow fell 0.6%.

Following the labor data, U.S. rate futures showed a 90% probability of a 25 basis-point rate cut by the Fed at its December 17-18 meeting, up from the previous 72% expectation.

Despite the gains, health insurance stocks, including UnitedHealth, continued their decline, following the fatal shooting of UnitedHealth's health insurance division CEO in Manhattan.

Meta Platforms saw a 2.4% rise after a U.S. appeals court upheld a law mandating ByteDance (TikTok's parent) to divest the app by early next year or face a ban.

The Cboe Volatility Index (VIX) dropped to 12.77, its lowest since mid-July, signaling reduced market fear.