Shares advance as investors focus on significant address from Powell
The Dow saw a rise of 170 points, equating to a 0.4% increase. Similarly, the S&P 500 saw a gain of 0.6%, and the Nasdaq Composite experienced a 0.9% increase. All three major indexes are on track to conclude the week in the green.
Investors are eagerly awaiting Powell's speech at an essential economic conference in Jackson Hole, Wyoming, scheduled for 10 am ET on Friday. Historically, Powell has employed this platform to hint at the Federal Reserve's impending policy decision, often resulting in notable market fluctuations.
Kurt Spieler, chief investment officer at First National Bank of Omaha, highlights his focus on Powell's speech for any hints regarding the extent of possible rate cuts beyond September.
The Federal Open Market Committee's minutes from its July meeting, released on Wednesday, indicate that the majority of its members would advocate for a rate cut in September if the inflation data continues to slow down. Some officials emphasized the importance of stressing that the Fed is data-driven and lacks a predetermined course of action.
Certain officials also raised concerns that prolonged restrictive policy could lead to a significant weakening of the already softening labor market. Data reveals that US job growth was less robust than initially estimated during the 12 months preceding March. The preliminary review of employment data by the Bureau of Labor Statistics for 2024 estimated a shortage of 818,000 jobs during that timeframe.
Recent figures indicate that job growth has slowed more than anticipated, sparking concerns among some investors that the US economy may be experiencing instability as interest rates remain at a 23-year high. The slowing job growth, coupled with a decline in inflation, has prompted traders to bet on rate cuts not only in September but also in November and December, according to the CME FedWatch Tool.
Although there have been discussions of a half-point cut during the Federal Reserve's monetary policy meeting in September, some investors believe this is unlikely given the current data, as such a significant move would suggest an impending or existing economic recession.
Market fears associated with an economic downturn have dissipated following a weak July jobs report that troubled markets earlier in August. Stocks have regained almost all lost ground due to the global markets turbulence after a positive consumer inflation report and retail sales data boosted investor confidence in the soft landing scenario—a scenario involving the Federal Reserve successfully reducing inflation without triggering a recession.
Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers Solutions, wrote in a Tuesday note, “Growth is slowing but not yet slow enough to be mistaken for the onset of a recession. Growth fears are a regular feature of the economic cycle.”
Meanwhile, gold futures reached an all-time high of $2570.40 an ounce on Tuesday, before retreating.
Data released on Thursday showed a 1.3% increase in the sales of previously owned homes in the US last month, marking an end to a four-month streak of declining sales. However, sales fell by 2.5% from the previous year, according to National Association of Realtors data.
Shares of Target have risen by 9.5% this week after the company reported improved quarterly earnings on Wednesday. On the contrary, shares of Macy's have fallen by 13.7% following the company's announcement of decreased sales for the last quarter and reduction in its full-year revenue forecast.
Boeing shares have dropped by 3.7% this week after the company discovered issues with a structural component between the engine and wings of its long-delayed 777X aircraft during a test flight, adding to Boeing's challenges following its safety crisis earlier this year.
This story is still in development and will be updated.
CNN's Bryan Mena contributed to this report.
Given the context, here are two sentences containing the words 'business' and 'investing':
Investors are closely watching the business environment, particularly looking for any signs that might influence their investing decisions in light of Powell's speech.
Regardless of the current market fluctuations, long-term business strategies and investing plans should consider the potential impact of the Federal Reserve's policy decisions.
