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Wall Street closed sharply higher on Friday, led by a rally in mega-cap growth stocks. Heavily suggestive and dovish comments made by Fed Chair Jerome Powell lifted investor mood. The three most widely followed indexes closed the session in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 462.30 points, or 1.1%, to close at 41,175.08. Twenty-eight components of the 30-stock index ended in positive territory, while two ended in negative.
The tech-heavy Nasdaq Composite gained 258.44 points, or 1.5%, to close at 17,877.09.
The S&P 500 increased 63.97 points, or 1.2%, to close at 5,634.61. All of the 11 broad sectors of the benchmark index closed in the green. The Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE) and the Technology Select Sector SPDR (XLK) advanced 1.9%, 1.9% and 1.6%, respectively.
The fear-gauge CBOE Volatility Index (VIX) decreased 9.6% to 15.86. A total of 10.6 billion shares were traded on Friday, lower than the last 20-session average of 11.9 billion. Advancers outnumbered decliners by an 8.08-to-1 ratio on the NYSE. On the Nasdaq, advancing issues led decliners by a 3.68-to-1 ratio.
Markets Rejoice on Powell’s Comments
Over the last few months, the Fed has continued to vaguely hint at a September rate cut but has fallen short of making a firm commitment. On Friday, at the central bank’s annual conference in Jackson Hole, Fed Chair Jerome Powell laid to rest all conjecture and, for the first time, let out that the time had finally come for the policy to be adjusted.
Powell mentioned that he has increased confidence that inflation is on a sustained path back to 2%, having risen about 7% during the COVID-19 pandemic. The upside risks of inflation have also diminished. Powell also hinted that recent jobs data had portrayed unmistakable signs of a slowdown and the downside risks to employment have increased.
Powell emphasized that further cooling down of the labor market would be unwelcome and that a series of rate cuts were imminent. Market participants currently expect the benchmark rate to be at 3.00-3.25% by the end of 2025. It is currently at 5.25-5.50%.
An imminent fall in interest rates entails more purchasing power in the hands of common investors. As a result, mega-cap growth stocks like technology and discretionaries led the gains of the day. In fact, the market rally was across all broad sectors.
Following last week’s biggest weekly advance in the year, all three closely followed indexes posted yet another winning week. The Dow Jones Industrial Average, the Nasdaq Composite and the S&P 500 advanced 1.3%, 1.4% and 1.5% for the week, respectively.
Economic Data
Per the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, new home sales for July increased to 739,000. The number for June was revised up to 668,000 from the previously reported 617,000.
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Stock Market News for Aug 26, 2024
Wall Street closed sharply higher on Friday, led by a rally in mega-cap growth stocks. Heavily suggestive and dovish comments made by Fed Chair Jerome Powell lifted investor mood. The three most widely followed indexes closed the session in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 462.30 points, or 1.1%, to close at 41,175.08. Twenty-eight components of the 30-stock index ended in positive territory, while two ended in negative.
The tech-heavy Nasdaq Composite gained 258.44 points, or 1.5%, to close at 17,877.09.
The S&P 500 increased 63.97 points, or 1.2%, to close at 5,634.61. All of the 11 broad sectors of the benchmark index closed in the green. The Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE) and the Technology Select Sector SPDR (XLK) advanced 1.9%, 1.9% and 1.6%, respectively.
The fear-gauge CBOE Volatility Index (VIX) decreased 9.6% to 15.86. A total of 10.6 billion shares were traded on Friday, lower than the last 20-session average of 11.9 billion. Advancers outnumbered decliners by an 8.08-to-1 ratio on the NYSE. On the Nasdaq, advancing issues led decliners by a 3.68-to-1 ratio.
Markets Rejoice on Powell’s Comments
Over the last few months, the Fed has continued to vaguely hint at a September rate cut but has fallen short of making a firm commitment. On Friday, at the central bank’s annual conference in Jackson Hole, Fed Chair Jerome Powell laid to rest all conjecture and, for the first time, let out that the time had finally come for the policy to be adjusted.
Powell mentioned that he has increased confidence that inflation is on a sustained path back to 2%, having risen about 7% during the COVID-19 pandemic. The upside risks of inflation have also diminished. Powell also hinted that recent jobs data had portrayed unmistakable signs of a slowdown and the downside risks to employment have increased.
Powell emphasized that further cooling down of the labor market would be unwelcome and that a series of rate cuts were imminent. Market participants currently expect the benchmark rate to be at 3.00-3.25% by the end of 2025. It is currently at 5.25-5.50%.
An imminent fall in interest rates entails more purchasing power in the hands of common investors. As a result, mega-cap growth stocks like technology and discretionaries led the gains of the day. In fact, the market rally was across all broad sectors.
Consequently, shares of NVIDIA Corporation (NVDA - Free Report) and Tesla, Inc. (TSLA - Free Report) soared 4.6% each. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Weekly Roundup
Following last week’s biggest weekly advance in the year, all three closely followed indexes posted yet another winning week. The Dow Jones Industrial Average, the Nasdaq Composite and the S&P 500 advanced 1.3%, 1.4% and 1.5% for the week, respectively.
Economic Data
Per the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, new home sales for July increased to 739,000. The number for June was revised up to 668,000 from the previously reported 617,000.