Wall Street coasts to the finish of its best week in the last 5

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.