The Standard & Poor's 500 index rose 1.2% this week to a record close amid the Federal Reserve's first rate cut of 2025.

The S&P 500 ended Friday's session at 6,664.36, its highest closing level ever. The market benchmark also hit a fresh intraday high on Friday at 6,671.82. It is now up 3.2% for the month and 13% for the year.

The Federal Reserve's Federal Open Market Committee on Wednesday reduced its benchmark lending rate by 25 basis points, noting increased downside risks to employment and signaling further policy easing later in 2025. This lowered interest rates to a range of 4% to 4.25%. While this was in line with Wall Street's expectations, it sparked a relief rally as it marked the first rate cut since December and follows a weaker-than-expected August payrolls report.

Communication services had the largest percentage increase of the week, up 3.4%, followed by a 2.1% climb in technology and a nearly 1.5% gain in consumer discretionary. Industrials and financials also edged higher.

Google parent Alphabet (GOOGL) had the strongest weekly gain in communication services, rising 5.8%. Google and PayPal (PYPL) announced a multiyear partnership to explore a range of digital commerce solutions. Also, according to a Bloomberg report citing people familiar with the matter, Google will meet the European Union's November deadline to propose changes to its advertising technology business following a $3.5 billion fine, but won't provide a full breakup that was previously requested by the EU and company rivals.

In the technology sector, Intel (INTC) shares soared 23% as Nvidia (NVDA) said it will invest $5 billion in Intel stock at $23.28 per share, as part of a collaboration to develop custom data center and personal computing products.

On the downside, real estate fell 1.4%, consumer staples shed 1.3% and materials declined 0.9%. Health care, utilities and energy also edged lower.

Decliners in real estate included Extra Space Storage (EXR), down 5.3%, and $Public Storage(PSA-N)$ (PSA), down 4.6%.

Next week, earnings are expected from companies including Micron Technology (MU), Costco Wholesale (COST) and Accenture (ACN).

Economic data will include the third estimate of Q2 gross domestic product. Also, August new home sales, existing home sales and durable goods orders are expected, as well as the August personal consumption expenditures price index.