As dovish comments from US Federal Reserve Chair Jerome Powell cemented expectations that the central bank will lower its key policy rate in September, US markets rose on Friday. “The time has come” to decrease the Fed funds target rate, Powell declared in highly anticipated remarks prior to the Jackson Hole Economic Symposium, adding that “the upside risks of inflation have diminished.”
Powell said, “We do not see or welcome further weakening in labor market conditions,” in a speech that seemed to almost ensure a rate cut at the policy meeting next month—the first one in more than four years.
Fed Turning Into Dovish Camp
Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska, declared, “The long wait is over.” “This was the dovish shift that market participants have been waiting for.” “The Fed is clearly turning to the dovish camp and Powell has made it crystal clear that September will be the start of multiple rate cuts coming the remainder of this year,” Detrick said.
Following the release of Powell’s prepared speech, all three major U.S. stock indexes saw a surge, with megacaps Nvidia, Apple, and Tesla giving the most strength. “Financials are at an all-time high, with a huge surge from regional banks,” Detrick stated. “One would assume regional banks and financials wouldn’t be as strong as they would be if a significant disaster or recession were imminent.
Building on the biggest Friday-to-Friday percentage gains of the year last week, all three indexes posted weekly gains. The S&P 500’s eleven major sectors all had positive closing percentages at the end of the day, with real estate shares posting the biggest percentage increase at 2.0%.
Working For Human Resources
With a $1 billion stock buyback plan and quarterly revenue beyond forecasts, Workday’s stock rose 12.5%, making it the largest percentage gainer on the Nasdaq. The company makes software for human resources. Following the discount retailer’s increase in its fiscal 2024 profit projection, Ross Stores saw a 1.8% gain.
Intuit, the parent company of Turbo Tax, saw a 6.8% decline in revenue for the quarter. On the NYSE, advances exceeded declines by an 8.08-to-1 ratio; on the Nasdaq, advancers were favored by a 3.68-to-1 ratio.
While the Nasdaq Composite achieved 149 new highs and 51 new lows, the S&P 500 registered 81 new 52-week highs and no new lows. 10.57 billion shares were traded on US exchanges for the whole day, down from an average of 11.88 billion over the previous 20 trading days.
