The stock market concluded the week with significant gains, reflecting investors' optimism following Federal Reserve Chair Jerome Powell's speech in Jackson Hole.
Jerome Powell's Speech
On Friday, Jerome Powell spoke in Jackson Hole, confirming that the Fed is leaning toward cutting interest rates in mid-September. This announcement provided investors with the long-awaited signal that monetary policy is set to loosen. "Powell delivered a final Jackson Hole speech to be remembered," said Sam Stovall, chief investment strategist at CFRA Research.
Market Reactions to Powell's Comments
After Powell's remarks, the Dow Jones rose by more than 900 points, about 2% during intraday trading, allowing it to reach a new all-time high. The Russell 2000 surged by over 3%, and the S&P 500 Equal Weight Index broke past its previous high set in November 2023. Semiconductors and regional banks also showed strong growth.
Economic and Inflation Expectations
Next week, the July Personal Consumption Expenditures (PCE) price index is expected to be released, which the Fed uses as its preferred measure of inflation. Economists anticipate a core PCE increase of 2.9% year-over-year. Even with potential inflation rises, investors do not seem overly concerned. Sam Stovall noted, "Investors are well aware of short-term hurdles," which is likely to lead to a positive week for markets.
Powell's speech, positive expectations around Nvidia's report, and upcoming inflation data set an optimistic tone for the stock market as August come to a close.
