Recession fears fade as Wall Street closes up its Best week of the year: Know More Here

Recession fears fade as Wall Street closes up its Best week of the year: Know More Here

by

As investors’ concerns about an impending economic slump subsided and their attention turned to the Jackson Hole Economic Symposium the following week, U.S. stocks ended higher on Friday, maintaining their largest weekly percentage gains of the year.

The S&P 500 and the Nasdaq saw gains for the seventh straight day as equities recovered from two weeks of losses. The sell-off proved the Nasdaq had entered correction territory and was spurred by bad economic data and increased fears of a recession.

The S&P 500 and the Nasdaq had their first weekly increases in five weeks, while all three indices saw their largest weekly percentage advances since late October.

“What we’re seeing in today’s markets is an extension of the comeback and the calming of earlier recession fears,” said Greg Bassuk, CEO of AXS Investments in New York.
“The positive economic data is really what’s fueling this rally, giving greater confidence to investors that are recession is likely to be avoided, and that the Fed will begin cutting rates in September.”

This week, a plethora of high-profile economic statistics, such as the consumer price index from the Labor Department and a retail sales report from the Commerce Department, gave confidence that consumer spending remains robust and that inflation is still slowly creeping toward the Federal Reserve’s 2% objective.

U.S. single-family housing starts fell to a nearly one-and-a-half-year low in July, according to data released on Friday. However, preliminary results from the University of Michigan regarding August consumer sentiment indicated a stronger-than-anticipated increase.

At the symposium in Jackson Hole, Wyoming, next week, representatives from several global central banks will give speeches. Fed Chair Jerome Powell’s keynote address on Friday might raise expectations for a rate-cut trajectory in the United States.

“All eyes are going to be laser-focused on Powell’s comments next week,” Bassuk said. “Market activity this year has consistently been based on the likelihood and extent of Fed rate cuts.”

In an interview with National Public Radio, Chicago Fed Chief Austan Goolsbee warned central bank officials not to stick with restrictive policies for longer than necessary.

According to CME’s FedWatch tool, financial markets are pricing in a 74.5% possibility that the Fed would reduce its key policy rate by 25 basis points after its September policy meeting, with a declining 25.5% chance of a super-sized 50-basis-point decrease.

At 40,659.76, the Dow Jones Industrial Average (.DJI) increased by 96.7 points, or 0.24%. The Nasdaq Composite (.IXIC) rose 37.22 points, or 0.21%, to 17,631.72, while the S&P 500 (.SPX) gained 11.03 points, or 0.20%, to 5,554.25.

Financials (.SPSY) saw the largest percentage gain among the S&P 500’s 11 major sectors, while industrials (.SPLRCI) saw the largest decline.

After forecasting stronger-than-expected sales for the fourth quarter, chip-making equipment company Applied Materials (AMAT.O) saw a 1.9% decline, erasing its previous spike.
Amcor reported a larger-than-expected drop in fourth-quarter revenue. Following the report, the packaging company’s U.S.-listed shares fell 3.7%.

On the NYSE, advancers outnumbered decliners by a ratio of 2.22 to 1; on Nasdaq, the ratio was 1.53 to 1.

While the Nasdaq Composite achieved 66 new highs and 85 new lows, the S&P 500 registered 13 new 52-week highs and no new lows.

10.11 billion shares were traded on US exchanges throughout the whole day, which is lower than the 12.27 billion average over the previous 20 trading days.

Leave a Comment