Financial institutions on Wall Street are leveraging interest rates - the rally persists.
Economic worries decrease, and the initial rate decrease creeps closer. US stocks keep progressing. The gathering of monetary authorities in Jackson Hole is eagerly anticipated. Then, potential new understandings may be shared about how the Fed assesses the dangers between tightening and loosening.
The US stock market rally continues into the new week. The major indices wrapped up in the green. The Dow Jones Index increased 0.6% to 40,897 points. The wider-ranging S&P 500 increased 1% to 5,608, while the tech-heavy Nasdaq Index rose 1.4% to 17,877. The three market indicators recorded their best week of the year, following unexpectedly strong economic data that eased recession concerns in the world's largest economy.
The new week began positively, with experts attributing this to anticipation of the international central bank conference in Jackson Hole, Wyoming. The focus is on a speech by Fed Chair Jerome Powell on Friday. Investors are hoping for hints about the next moves of the US central bank. "The Fed recently mentioned that the risks of policy being too tight or too loose are roughly equal," said Phil Blancato, CEO of wealth manager Ladenburg Thalmann. "In that sense, any statement could lead markets to perceive one risk as more pronounced than the other."
"We expect the Fed to reluctantly endorse a 25 basis point cut at its September 18 meeting. The chances of 50 basis points seem low, unless the employment numbers on September 6 show significant weakness," said Andrew Brenner, rates strategist at NatAlliance Securities. The weaker-than-expected index of leading indicators did not impede rate cuts.
AMD acquires - GM downsizes - B. Riley seeks
In anticipation of lower rates, the Dollar Index dropped 0.6% to 101.88 points. The Euro, in turn, increased 0.5% to 1.1082 dollars. After reaching a new all-time high, the gold price retreated a bit due to profit-taking. Meanwhile, it was a downward trend in the oil market. The North Sea Brent and US WTI each decreased by approximately 2.5% to $77.81 and $74.49 per barrel (159 liters). Last week, they had already dropped by a total of around 3% and 5%. Persistent concerns about demand from China and the approaching end of the US summer vacation season are among the reasons, said Hiroyuki Kikukawa from broker Nissan Securities.
Individual stocks stood out in the anticipation of lower rates. Advanced Micro Devices gained attention with another acquisition. The shares of the US chipmaker climbed 4.5% after the company announced it plans to acquire server manufacturer ZT Systems for $4.9 billion. With this move, AMD aims to decrease the gap with market leader Nvidia in high-margin AI graphics processors (GPUs). So far, Nvidia dominates around 80% of the world market for AI-specific processors. After being downgraded to "Equalweight" by Morgan Stanley, HP's stock declined 3.6%.
McDonald's shares saw demand, increasing about 3.3%. Analysts at investment bank Evercore ISI increased their price target, citing recent market share gains by the company. General Motors (GM) appears to be reducing its software and services division. The U.S. automaker is cutting over 1,000 jobs in the area, according to a person familiar with the matter. Its stock rose by 1%. FuboTV shares surged 17.6% after a federal judge temporarily blocked the launch of a competing sports streaming service. Meanwhile, shares of struggling investment bank B. Riley fell another 5.8% after dropping around 65% last week. Co-founder and co-CEO Bryant Riley offered to buy the bank on Friday after the company warned of potential write-downs and a potential quarterly loss.
Estee Lauder reported earnings. Its stock fell 2.2% after the cosmetics giant issued disappointing annual guidance, blaming weak business in China.
The anticipation of potential changes in the Fed's interest rate policy, as discussed at the Jackson Hole conference, has led to a decrease in the Dollar Index. Investors are closely watching Fed Chair Jerome Powell's speech for hints about the future moves of the US central bank.
The tech-focused acquisition of server manufacturer ZT Systems by Advanced Micro Devices could be a strategic move to decrease the gap with Nvidia in the high-margin AI graphics processor market, potentially influenced by the current interest rate policy environment.
