By Peter Bergman (MoneyAmped.com)
U.S. stocks closed on a positive note on Friday, continuing their significant weekly gains as concerns about a potential economic decline subsided and investors turned their attention to the upcoming Jackson Hole Economic Symposium.
The S&P 500 and the Nasdaq Continue Their Strong Gains
The S&P 500 and the Nasdaq extended their winning streak to seven consecutive sessions as stocks recovered from a sharp decline experienced two weeks ago. The market decline, triggered by disappointing economic indicators and growing concerns of a recession, has officially placed the Nasdaq in correction territory.
Significant weekly percentage gains were seen across all three indexes, marking the moment when they experienced their most significant increases since the end of October. Both the S&P 500 and the Nasdaq realized their first weekly gain in the past five weeks, which is a noteworthy achievement.
“The current trends in today’s markets reflect a continuation of the recovery and the easing of previous concerns about a recession,” said Greg Bassuk, the chief executive officer of AXS Investments, which is based in New York.
“The encouraging economic data is truly driving this surge, instilling more assurance in investors that a recession is probably going to be averted and that the Federal Reserve will initiate rate reductions in September.”
This week, a plethora of important economic data was made public, including the Labor Department’s consumer price index and the Commerce Department’s retail sales report. The Treasury Department released both of these reports. These reports provide reassurance that inflation is steadily moving towards the target of 2% that the Federal Reserve has set for itself and that consumer spending continues to be robust.
The most recent data, which was released on Friday, showed that the number of single-family housing starts in the United States dropped significantly in July, reaching a level that has yet to be seen in nearly a year and a half. On the other hand, there was some encouraging news, as the preliminary evaluation of consumer sentiment conducted by the University of Michigan in August revealed a development that was more favorable than was anticipated.
Jerome Powell’s Speech Will Be in the Spotlight
Central bank officials from around the world are scheduled to deliver speeches at the upcoming symposium in Jackson Hole, Wyoming. One speech that is particularly anticipated is the keynote address by Fed Chair Jerome Powell on Friday, as it could provide insights into the potential trajectory of interest rate cuts in the United States.
“Powell’s comments next week will undoubtedly attract significant attention,” Bassuk remarked. “The market has been heavily influenced this year by the probability and magnitude of interest rate reductions by the Federal Reserve.”
Austan Goolsbee, the head of the Chicago Federal Reserve, expressed caution in an interview with National Public Radio regarding the need for central bank officials to avoid keeping restrictive policies in place for longer than required.
According to CME’s FedWatch tool, financial markets indicate a high probability of a 25-basis-point reduction in the Fed’s key policy rate at the conclusion of its September policy meeting. There is a smaller chance, at 25.5%, of a more significant 50-basis-point cut.
The Dow Jones Industrial Average increased by 96.7 points, representing a gain of 0.24%, reaching a level of 40,659.76. The S&P 500 increased by 11.03 points, or 0.20%, to reach 5,554.25, while the Nasdaq Composite saw a rise of 37.22 points, or 0.21%, reaching 17,631.72.
Out of the 11 primary sectors of the S&P 500, financials experienced the most significant percentage increase, while industrials faced the largest decline.
Applied Materials (NASDAQ:AMAT) experienced a decline of 1.9%, undoing its previous increase, following the company’s projection of fourth-quarter revenue that exceeded expectations.
Amcor (NYSE:AMCR) reported a larger-than-expected decrease in sales for the fourth quarter. The packaging company’s shares listed on the U.S. market experienced a 3.7% decline following the release of the report.
The number of advancing issues on the New York Stock Exchange (NYSE) was more significant than the number of decliners by a ratio of 2.22-to-1, while on the Nasdaq, the ratio of advancers to decliners was 1.53-to-1.
The Nasdaq Composite saw 66 new highs and 85 new lows, while the S&P 500 saw 13 new 52-week peaks and did not experience any new lows on the chart. The S&P 500 made 13 new highs and did not encounter any new lows.
Trading activity on U.S. exchanges reached 10.11 billion shares, which is slightly lower than the average of 12.27 billion shares recorded over the previous 20 trading days.
