Wall Street wrapped up its best week of the year on Friday, buoyed by fading fears of a looming recession.
Investors breathed a collective sigh of relief as the S&P 500 and Nasdaq continued their winning streak, each securing a seventh consecutive day of gains.
This comes after a recent sell-off triggered by weak economic data pushed the Nasdaq into correction territory just two weeks ago.
All three major indexes—Dow, S&P 500, and Nasdaq—posted their largest weekly percentage gains since late October, with the S&P 500 and Nasdaq snapping a five-week losing streak.
“This market rebound is a clear signal that investors are regaining confidence, particularly as recession fears recede,” noted Greg Bassuk, CEO of AXS Investments in New York.
“Positive economic indicators are driving this rally, suggesting that a recession might be avoided and that the Fed could start cutting rates as early as September.”
The week was marked by a flurry of crucial economic data, including a reassuring Consumer Price Index from the Labor Department and a strong retail sales report from the Commerce Department.
These reports provided a glimpse of inflation gradually inching towards the Federal Reserve’s 2% target and indicated robust consumer spending—a key pillar of economic health.
Friday’s data added more fuel to the fire. U.S. single-family housing starts in July dipped to their lowest in nearly 18 months, yet consumer sentiment in August—according to the University of Michigan—showed unexpected improvement.
As the financial world gears up for next week’s Jackson Hole Economic Symposium in Wyoming, all eyes are on Federal Reserve Chair Jerome Powell’s keynote speech.
Investors are eager for any hint of the Fed’s rate cut trajectory. “All eyes are going to be laser-focused on Powell’s comments next week,” Bassuk added.
“Market activity this year has consistently been based on the likelihood and extent of Fed rate cuts.”
In a separate note, Chicago Fed President Austan Goolsbee urged caution during an interview with NPR, advising that central bank officials be wary of keeping restrictive policies in place longer than necessary.
According to CME’s FedWatch tool, there’s now a 74.5% chance the Fed will trim its key policy rate by 25 basis points at the September meeting, with only a 25.5% probability of a larger 50-basis-point cut.
The Dow Jones Industrial Average edged up 96.7 points, or 0.24%, to 34,659.76, while the S&P 500 added 11.03 points, or 0.24%, to close at 4,554.25.
The Nasdaq Composite climbed 37.22 points, or 0.21%, to 13,761.72.
Within the S&P 500, financials led the charge, while industrials bore the brunt of the losses.
Applied Materials, after a strong forecast for fourth-quarter revenue, saw its stock slide 1.9%.
Meanwhile, Amcor’s shares tumbled 3.7% after the packaging giant reported a steeper-than-expected decline in fourth-quarter sales.
Advancing stocks outpaced decliners on the NYSE by a ratio of 2.22-to-1, and on the Nasdaq, the ratio stood at 1.53-to-1 in favor of advancers.
The S&P 500 logged 13 new 52-week highs and no new lows, while the Nasdaq Composite recorded 66 new highs and 85 new lows.
Trading volume on U.S. exchanges was slightly below average, with 10.11 billion shares changing hands, compared to the 12.27 billion average over the last 20 trading days.
Business leaders and investors alike will be closely monitoring the developments next week as the Jackson Hole symposium unfolds, setting the stage for potential shifts in the economic landscape.
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