Fed Chair Comments Power Market Advance On Wall Street, Housing Market Data Signal Mixed Outlook

Barry Adams
23 Aug, 2024
New York City

Stocks escalated their advances in Friday's trading after comments from Fed Chair Powell suggested a possible rate cut in the future. 

The S&P 500 index jumped 1.2%, the Nasdaq Composite advanced 1.7%, and Treasury yields edged lower. 

Fed Chair Jerome Powell suggested that a policy adjustment is needed and a possible rate cut is likely. 

However, Powell fell short of indicating the amount and timing of future rate cuts. 

“The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” Powell said at an annual gathering of central bankers from around the world in Jackson Hole, Wyoming. 

Investors were quick to bid up stocks following Powell's comments and interpreted that the central bank is likely to begin interest rate cuts as early as after the policy meeting on September 19. 

Despite the market's enthusiasm for possible imminent rate cuts, inflation is still well anchored in the economy and showing little progress from the 3% level to the Fed's target of 2%. 

If the Federal Reserve starts the process of cutting rates in September, it is almost certain that consumer price inflation will hover around 3% for several more months and may even resume its upward journey. 

On the economic front, sales of new single-family houses in July increased from the previous month and from a year earlier, the Commerce Department reported Friday. 

Seasonally adjusted single-family house sales in July increased 10.6% from the previous month and rose 5.6% from a year ago to 739,000. 

A separate report from the government agency showed that building permits, housing starts, and housing completions declined from a year ago in July. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 1.2% to 5,637.50, the Nasdaq Composite advanced 1.7% to 17,916.86, and the Russell 2000 index rose 1.2% to 2,175.27. 

The yield on 2-year Treasury notes edged lower to 3.96%, 10-year Treasury notes decreased to 3.81%, and 30-year Treasury bonds inched higher to 4.10%.

WTI crude oil increased $1.27 to $74.28 a barrel, and natural gas prices edged down 2 cents to $2.02 a thermal unit.

Gold fell by $13.53 to $2,501.75 an ounce, and silver increased by $0.35 to $29.39.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 101.44.

 

U.S. Stock Movers

Cava Group jumped 16.7% to $118.98, and the fast-casual restaurant company reported better-than-expected quarterly results. 

Ross Stores gained 1.8% to $155.26, and the discount household goods and apparel store chain reported better-than-expected quarterly results. 

Uber Technologies decreased 0.3% to $73.28, and General Motors advanced 2.5% to $47.63 after the two companies struck a partnership for the driverless car fleet.