Financial Markets                      09/12 15:39

   

   NEW YORK (AP) -- Wall Street coasted to the finish of its best week in the 
last five on Friday as U.S. stocks hung near their record levels.

   The S&P 500 barely budged and edged down by less than 0.1% from the all-time 
high it set the day before. The Dow Jones Industrial Average fell 273 points, 
or 0.6%, while the Nasdaq composite added 0.4% to its own record set on 
Thursday.

   Stocks have rallied with expectations that the Federal Reserve will cut its 
main interest rate for the first time this year at its meeting next week. Such 
a move would give the economy a kickstart, and mortgage rates have already 
dropped in anticipation of it.

   Expectations for a cut have built as recent reports suggested the U.S. job 
market could settle into the precise balance that Wall Street has been betting 
on: slow enough to convince the Fed that it needs help, but not so weak that it 
will mean a recession, all while inflation doesn't take off.

   A lot is riding on whether that bet proves correct. Stocks have already 
soared on it. And if the Fed ends up cutting interest rates fewer times than 
traders expect, including three this year, the market could retreat in 
disappointment. That's even if everything else goes right, and the economy does 
not fall into a recession and President Donald Trump's tariffs don't send 
inflation much higher.

   Investors, "and I think the Fed, are convinced that we are not on the verge 
of a surge in inflation," according to Scott Wren, senior global market 
strategist at Wells Fargo Investment Institute.

   A survey from the University of Michigan on Friday suggested expectations 
for inflation may not be worsening among U.S. consumers. Preliminary data 
suggested they're bracing for inflation of 4.8% in the upcoming year, the same 
as they were a month earlier.

   Expectations for inflation over the longer term crept higher, though they're 
still below where they were in April, when Trump announced his worldwide 
tariffs.

   In the meantime, Wall Street continued to drift around its record heights.

   RH fell 4.6% after the furniture retailer reported profit and revenue for 
the latest quarter that came up short of analysts' expectations. It also 
trimmed its forecasted range for revenue this fiscal year amid what CEO Gary 
Friedman called "the polarizing impact of tariff uncertainty and the worst 
housing market in almost 50 years."

   Oracle sank 5.1% and was the single heaviest weight on the S&P 500 index. 
But that shaved only a bit off its surge from earlier in the week, when it 
soared to its best day since 1992 amid excitement about its winning 
multibillion dollar contracts related to artificial-intelligence technology.

   Another company that's benefited from the AI frenzy, Super Micro Computer, 
rose 2.4% after saying it's begun high-volume shipments of racks using 
Blackwell Ultra equipment from Nvidia that can be used for AI.

   Microsoft climbed 1.8% after European Union regulators accepted the tech 
giant's proposed changes to its Teams platform, resolving a long-running 
antitrust investigation.

   The European Commission said Friday that Microsoft's final commitments to 
unbundle Teams from its Office software suite, including further tweaks 
following a market test in May and June, are enough to satisfy competition 
concerns.

   All told, the S&P 500 slipped 3.18 points to 6,584.29. The Dow Jones 
Industrial Average fell 273.78 to 45,834.22, and the Nasdaq composite rose 
98.03 to 22,141.10.

   In stock markets abroad, indexes held relatively steady in Europe after 
mostly rising in Asia.

   Japan's Nikkei 225 climbed 0.9% to another record, while Hong Kong's Hang 
Seng rallied 1.2% for two of the bigger moves.

   In the bond market, the yield on the 10-year Treasury climbed to recover 
some of its drop from earlier in the week. It rose to 4.06% from 4.01% late 
Thursday.

   Yields have been mostly sinking as expectations built on Wall Street that 
the Fed will resume cutting rates soon.

   The Fed has been on hold through 2025, mostly because of the risk that 
Trump's tariffs could send prices for all kinds of U.S. household purchases 
much higher. Lower interest rates can make inflation even worse.

   That inaction, though, has infuriated Trump. He has threatened to fire Fed 
Chair Jerome Powell, whom he has nicknamed "Too Late," and has escalated his 
attempt to fire Federal Reserve Governor Lisa Cook, accusing her of mortgage 
fraud.

   ___

   AP Writers Teresa Cerojano and Matt Ott contributed.

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