Wall Street ends higher, dollar firms ahead of a big week for market risk

By Stephen Culp

NEW YORK (Reuters) -U.S. stocks advanced and the dollar firmed on Friday as investors girded themselves for the week ahead, which includes a Federal Reserve policy meeting, crucial corporate results and U.S. President Donald Trump's August 1 deadline for negotiating trade deals. 

"There’s increasing confidence that the economy won't be derailed by tariffs," said Thomas Martin, Senior Portfolio Manager at GLOBALT in Atlanta. "In the meantime, companies are reporting good earnings, the economic numbers are coming in within the range and people want to own stocks. They don't want to miss out."

All three indexes closed in positive territory and notched weekly gains. The S&P 500 and the Nasdaq logged fresh record closing highs and the blue-chip Dow ended 0.25% shy of its all-time closing level reached on December 24, 2024.

Gold lost some shine, pressured by the dollar as healthy risk appetites lured investors away from the safe-haven metal.

With Trump's negotiating deadline just a week away, the U.S. and its trading partners are scrambling to reach trade agreements, with European negotiators heartened by the deal with Japan announced on Tuesday.

Intel's shares INTC.O dropped 8.5% after the chipmaker forecast steeper-than-expected quarterly losses and said it had halted or scrapped new factory projects in the U.S. and Europe.

More than a third of the companies in the S&P 500 have posted results, 80% of which have beaten estimates, according to LSEG data.

Analysts now expect year-on-year second-quarter earnings growth of 7.7%, compared with the 5.8% estimate as of July 1. 

Four members of the Magnificent 7 group of Artificial Intelligence-related megacap stocks - Amazon, Apple, Meta and Microsoft are on next week's earnings docket, and market participants will scrutinize the companies' conference calls for signs that AI expenditures are beginning to pay off and whether tariff-related uncertainties continue to weigh on forward guidance.

U.S. economic data released on Friday showed an unexpected decline in new orders for core capital goods, as companies hold back on big ticket purchases amid the fog of ongoing trade talks.

The Fed is expected to convene next week for a two-day monetary policy meeting, which is expected to culminate in a decision to let its federal funds target rate stand in the 4.25% to 4.50% range. The meeting comes at a moment in which Fed Chair Jerome Powell is facing criticism from Trump for not cutting rates.

"The Fed is going to do what it's going to do and Powell is going to stay in his job," Martin added. "The economy is doing great, so they really don't need to lower short-term interest rates."

"Inflation is still a question, so they're better off not lowering rates if they don't have to," Martin said.

The Dow Jones Industrial Average rose 208.01 points, or 0.47%, to 44,901.92, the S&P 500 rose 25.30 points, or 0.40%, to 6,388.65 and the Nasdaq Composite rose 50.36 points, or 0.24%, to 21,108.32. 

European shares settled lower as market participants parsed mixed corporate earnings and awaited developments in the U.S.-EU trade negotiations. 

MSCI's gauge of stocks across the globe rose 0.47 points, or 0.05%, to 941.82.

MSCI's gauge of stocks across the globe  rose 0.01 points, or 0.00%, to 941.36.

The pan-European STOXX 600 index fell 0.29%, while Europe's broad FTSEurofirst 300 index fell 5.79 points, or 0.27%

Emerging market stocks  fell 10.29 points, or 0.81%, to 1,257.00. MSCI's broadest index of Asia-Pacific shares outside Japan closed lower by 0.93%,  to 661.17, while Japan's Nikkei  fell 370.11 points, or 0.88%, to 41,456.23.

The yield on benchmark U.S. 10-year notes fell 2.4 basis points to 4.384%, from 4.408% late on Thursday.

The U.S. dollar gained strength but remained on course for its biggest drop in a month as investors focused on economic data, tariff negotiations and central bank meetings on the calendar for next week. 

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.23% to 97.68, with the euro down 0.11% at $1.1741.

Against the Japanese yen, the dollar strengthened 0.44% to 147.65.

In cryptocurrencies, bitcoin fell 1.66% to $116,805.28. Ethereum declined 2.52% to $3,645.63.

Oil prices softened as investors mulled downbeat economic news and signs of growing supply, despite optimism that U.S. trade deals could boost global economic growth.

U.S. crude fell 1.32% to $65.16 per barrel, while Brent fell to $68.44 per barrel, down 1.07% on the day.

Gold prices dropped in opposition to the firming dollar, amid signs of progress in U.S.-EU trade talks.

Spot gold fell 0.9% to $3,337.66 an ounce. U.S. gold futures fell 1.24% to $3,329.10 an ounce.

(Reporting by Stephen Culp; Additional reporting by Kevin Buckland; Editing by Marguerita Choy and Daniel Wallis)