US stocks edged higher on Friday, setting the stage for strong weekly wins after Wall Street's expectations for a jumbo interest rate cut by the Federal Reserve shot up overnight.
The S&P 500 (^GSPC) moved up about 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) climbed just over the flat line to point to a fifth day of gains for both gauges amid a comeback for tech stocks. The Dow Jones Industrial Average (^DJI) also added roughly 0.2%.
Stocks are rising as the market warms once again to the likelihood of a half-point rate cut by the Fed after virtually writing off the chances of a big pivot in light of recent inflation and jobs data. Traders are now pricing in a 49% chance of a 50 basis point move next week, compared with 15% at one point on Thursday.
Read more: Fed predictions for 2024: What experts say about the possibility of a rate cut
The odds of a 0.5% reduction jumped amid reports by the Financial Times and The Wall Street Journal that the size of the Fed's Sept. 18 decision will be a close call. Adding to the debate, influential former New York Fed president Bill Dudley said there's a "strong case" for a deeper cut.
