Financial Markets                      12/05 09:30

   

   NEW YORK (AP) -- The U.S. stock market is flirting with its all-time high on 
Friday.

   The S&P 500 rose 0.5% and is on track to squeak past its record closing 
level, which was set in late October. The Dow Jones Industrial Average was up 
238 points, or 0.5%, as of 10:15 a.m. Eastern time, and the Nasdaq composite 
was 0.6% higher.

   If the S&P 500 finishes the day at an all-time high, it would be just the 
latest time the U.S. stock market has powered past what appeared to be a 
debilitating set of worries. Most recently, those concerns centered on what the 
Federal Reserve will do with interest rates, whether too many dollars are 
flowing into artificial-intelligence technology and if sharp drops for 
cryptocurrencies would bleed over into other markets.

   Ulta Beauty helped lead the way on Friday and jumped 11% after the retailer 
reported stronger profit and revenue for the latest quarter than analysts 
expected. CEO Kecia Steelman said its customers are broadly feeling pressure, 
but Ulta saw growth across its categories, particularly in e-commerce. It 
raised its forecast for revenue over the full year.

   Another encouraging signal for the holiday shopping season came from 
Victoria's Secret & Co. It reported a milder loss for the latest quarter than 
analysts expected, and it likewise raised its forecast for sales over the full 
year. Its stock jumped 20.4%.

   Warner Bros. Discovery was also strong and rose 3.2%. Netflix said it would 
buy Warner Bros. for $72 billion in cash and stock following the pending split 
for the company behind HBO Max, "Casablanca" and "Harry Potter" from Discovery 
Global.

   The deal between the two giants could raise fears about too much industry 
power residing in one company, though, meaning it may not be a sure thing. 
After initially falling more than 5%, Netflix's stock pared its drop to a dip 
of 0.2%.

   Paramount Skydance, which earlier had been seen as a front-runner to buy 
Warner Bros., fell 6.3%.

   Also on the losing end of Wall Street was Hewlett Packard Enterprise. It 
slipped 0.6% after reporting weaker revenue for the latest quarter than 
analysts forecast, though its profit topped expectations.

   The U.S. stock market broadly has been much quieter this week. It's a 
respite following earlier weeks of sharp and scary swings.

   After some back and forth, the widespread expectation among traders is that 
the Fed will cut its main interest rate next week in hopes of shoring up the 
slowing U.S. job market. If it does, that would be the third cut of the year, 
and such expectations have been a major reason the S&P 500 has climbed back 
toward its record.

   Investors love lower interest rates because they boost prices for 
investments and can juice the economy. The downside is that they can worsen 
inflation, which is stubbornly remaining above the Fed's 2% target.

   A set of economic reports released on Friday did little to change 
expectations for a coming cut. One report said that an underlying measure of 
inflation that the Fed prefers to use was at 2.8% in September, exactly as 
economists expected.

   A separate report said U.S. consumers appear to be bracing for less-bad 
inflation in the coming year. They're now forecasting 4.1% inflation for the 
year ahead, down from their forecast of 4.5% last month, and the lowest reading 
since January, according to the University of Michigan. That's important 
because when expectations for inflation are doing the opposite and rising, it 
can create a vicious cycle that only worsens inflation.

   In the bond market, Treasury yields held relatively steady. The yield on the 
10-year Treasury remained at 4.11%, where it was late Thursday.

   In stock markets abroad, indexes rose across much of Europe and Asia.

   Germany's DAX returned 0.9%, and South Korea's Kospi jumped 1.8% for two of 
the world's bigger gains.

   Tokyo's Nikkei 225 fell 1.1% after data showed household spending in Japan 
fell 3.0% in October from a year earlier. It was the sharpest drop since 
January 2024. Japanese markets have been shaky recently after the Bank of Japan 
hinted that hikes to interest rates may be coming.

   ___

   AP Writer Teresa Cerojano contributed.

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