S&P Near Record; Fed Cuts Likely, Netflix-WBD Deal

Introduction

U.S. equity benchmarks finished cautiously higher after a key inflation report narrowed the path for monetary policy and shifted investor attention to a handful of consequential corporate developments. The S&P 500 came close to a fresh record, the Nasdaq extended its recent winning streak, and headline corporate deals and earnings created sector-specific winners and losers.

Macro driver: PCE cooling boosts Fed-cut expectations

The Bureau of Economic Analysis’ core Personal Consumption Expenditures (PCE) index — the Federal Reserve’s preferred inflation gauge — showed a softer-than-expected reading, prompting markets to assign substantially higher odds to an interest-rate reduction at the Fed’s next meeting. Traders pushed implied odds of a 25 basis-point cut to roughly 87%, and that shift supported broad risk appetite across the major indices.

Index reactions

• S&P 500: rose modestly and tested prior record territory, reflecting cautious optimism about easing policy.
• Nasdaq Composite: continued its multi-session advance, with growth-oriented names regaining momentum.
• Dow Jones Industrial Average: gained ground, helped by select industrial and media-related components.

Labor data nuance

Alongside the PCE print, labor indicators painted a mixed picture. Reported job cuts climbed to their highest monthly tally since 2022, while initial unemployment claims fell to their lowest levels since September 2022. The juxtaposition of a cooling inflation trend and a still-resilient labor market underpins the Fed’s balancing act and helps explain why investors are pricing in a near-term easing move without assuming a rapid cyclical recovery.

Corporate catalysts: Deals and earnings reshape sector flows

Several discrete corporate events in the past 24 hours drove outsized moves within the indices, creating winners and losers independent of the broader macro backdrop.

Netflix agrees to acquire Warner Bros. Discovery

Netflix announced it will acquire Warner Bros. Discovery’s studios and streaming operations in a transaction valued at about $72 billion. The deal represents a major consolidation in streaming and entertainment assets. Warner Bros. Discovery shares jumped on the news, while Netflix shares traded lower intraday amid investor scrutiny over deal financing and strategic fit. The transaction was volatile enough to prompt trading halts during active session moves.

UiPath posts first GAAP profit

UiPath reported its first GAAP-profitable quarter, alongside revenue growth of roughly 16% year-over-year. The results and accompanying commentary on profitability expectations triggered a sharp positive move in the stock — gains exceeded 20% in extended trading — and demonstrated how execution milestones can rapidly re-rate a growth software name.

Hewlett Packard Enterprise issues weak guidance

Hewlett Packard Enterprise’s quarter fell short of sales expectations and the firm cited delays in AI server shipments as a material headwind. The disappointing guidance sent HPE shares down about 9% and pulled on sentiment within hardware and enterprise IT vendor peers, highlighting the sensitivity of AI-capex narratives to execution timelines.

S&P 500 rebalancing adds interest

The S&P 500’s quarterly roster changes included the addition of companies such as Carvana, CRH, and Comfort Systems. Inclusion events typically attract passive index flows and can boost short-term demand for newly added names, affecting sector allocation within index-tracking funds.

What this means for investors

The latest data and corporate headlines suggest a bifurcated market environment: macro drivers (cooler inflation) are supportive of a near-term easing in policy and higher valuations, while company-specific outcomes — large M&A, earnings beats and misses — remain the primary source of dispersion. Active investors can find opportunities in names impacted by the deal dynamics or those showing durable profitability improvements, while risk managers should monitor execution risk in AI-related hardware names and the financing assumptions behind large M&A deals.

Conclusion

In the past 24 hours, a softer core PCE reading materially raised the probability of a Fed rate cut and nudged major U.S. indices toward higher closes, with the S&P 500 nearly challenging its record. Meanwhile, Netflix’s landmark deal for Warner Bros. Discovery, UiPath’s milestone profitability, and HPE’s weak guidance produced concentrated volatility across sectors. These concrete developments — not vague macro narratives — are currently driving index composition and stock-level performance, underscoring the importance of following both central-bank signals and company-specific news for portfolio positioning.