Wall Street wrapped up its best week in five on September 12, with US stocks hovering near record levels. The S&P 500 barely shifted, edging down by less than 0.1% from the peak it hit just a day earlier. Meanwhile, the Dow Jones Industrial Average dipped 273 points (0.6%), while the Nasdaq composite gained 0.4%, marking a new record.

The stock surge comes as hopes rise for a Federal Reserve interest rate cut, expected to happen next week. Such a move could invigorate the economy, and mortgage rates have already started to decline in anticipation.

Recent reports hint that the job market might find a sweet spot: slow enough to warrant intervention from the Fed but not so weak as to spark a recession. Meanwhile, inflation appears to be holding steady.

However, it's a waiting game for investors. Should the Fed cut rates less frequently than the three times many anticipate this year, disappointment could ripple through the market, even if the economy remains stable.

Scott Wren, a senior global market strategist at Wells Fargo, noted, "Both investors and the Fed seem convinced that we're not facing an inflation surge." In a recent University of Michigan survey, consumer inflation expectations remained unchanged at 4.8% for the coming year.

Meanwhile, the stock performance was mixed on Friday—furniture retailer RH saw a 4.6% drop after missing profit targets, while Oracle fell by 5.1%, weighing on the S&P 500 despite its earlier gains from AI-related contracts.

On the upside, Super Micro Computer rose 2.4% thanks to its high-volume AI shipments, and Microsoft gained 1.8% after the EU approved changes to its Teams platform, effectively resolving a long-standing antitrust issue.

Overall, the S&P 500 slipped by 3.18 points to close at 6,584.29, the Dow dropped by 273.78 to 45,834.22, and the Nasdaq rose by 98.03 to end at 22,141.10.

Internationally, stock indexes remained stable in Europe after gains in Asia. Japan’s Nikkei 225 surged 0.9% to another record, while Hong Kong's Hang Seng climbed 1.2%.

In the bond market, the yield on the 10-year Treasury edged up to 4.06% from 4.01%. Yields have been declining amid expectations that the Fed will soon cut rates, although this has infuriated President Trump, who has threatened to dismiss Fed Chair Jerome Powell over perceived inaction.

As Wall Street dances at these record heights, the coming weeks will be crucial. Investors are on the edge of their seats, watching to see which way the Fed will lean—and how that will affect their portfolios.