The S&P 500 rose 0.1% from the all-time high it set the day before. The Dow Jones Industrial Average was down 188 points, or 0.4%, as of 2:05 p.m. Eastern time, and the Nasdaq composite was 0.5% higher. Both likewise set records the day before.

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 hit the precise balance that Wall Street has been betting on: slowing 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 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.

Record highs for Wall Street

In the meantime, Wall Street continues to drift around its record heights.

RH fell 4.7% after the furniture retailer reported profit and revenue for the latest quarter that came up short of analysts’ expectations. It also trimmed its forecasted range for revenue this fiscal year amid what CEO Gary Friedman called “the polarizing impact of tariff uncertainty and the worst housing market in almost 50 years.”

Oracle sank 4.1% and was one of the day’s heaviest weights on the S&P 500 index. But that shaved only a bit off its surge from earlier in the week, when it soared to its best day on 1992 amid excitement about multibillion dollar contracts signed related to artificial-intelligence technology.

Another company that’s benefited from the AI frenzy, Super Micro Computer, rose 2.9% after saying it’s begun high-volume shipments of racks using Blackwell Ultra equipment from Nvidia that can be used for AI.

Global markets

Microsoft climbed 2% after European Union regulators accepted the tech giant’s proposed changes to its Teams platform, resolving a long-running antitrust investigation.

The European Commission said Friday that Microsoft’s final commitments to unbundle Teams from its Office software suite, including further tweaks following a market test in May and June, are enough to satisfy competition concerns.

In stock markets abroad, indexes edged lower in Europe after rising in much of Asia.

Japan’s Nikkei 225 climbed 0.9% to another record, while Hong Kong’s Hang Seng rallied 1.2% for two of the bigger moves.

In the bond market, the yield on the 10-year Treasury climbed to recover some of its drop from earlier in the week. It rose to 4.07% from 4.01% late Thursday.

Trump vs. The Fed

Yields have been mostly sinking as expectations built on Wall Street that the Fed will resume cutting rates soon.

The Fed has been on hold through 2025, mostly because of the risk that Trump’s tariffs could send prices for all kinds of U.S. household purchases much higher. Lower interest rates can make inflation even worse.

That inaction, though, has infuriated Trump. He has threatened to fire Fed Chair Jerome Powell, whom he has nicknamed “Too Late,” and has escalated his attempt to fire Federal Reserve Governor Lisa Cook, accusing her of mortgage fraud.

On Thursday, the Trump administration asked an appeals court to remove Cook from the Federal Reserve’s board of governors by Monday, before the central bank announces its next decision on interest rates Wednesday. Trump initially sought to fire Cook Aug. 25, but a federal judge ruled late Tuesday that the removal was illegal and reinstated her to the Fed’s board.

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AP Writers Teresa Cerojano and Matt Ott contributed.