|
|
By Jeffrey
Cane | Friday, August 27 Smooth,
Relaxing Fedspeak. Investors appeared
to take comfort today from Federal
Reserve Chairman Jerome
Powell, who affirmed in his
virtual Jackson
Hole speech that the Fed might begin reducing its $120
billion-a-month bond-buying program sometime this year. He also indicated
that even so, the central bank was in no hurry to raise interest rates. A gentle
easing toward a tightening was the message, and stocks advanced
today. The S&P 500 climbed 0.9%, to a record close, its 52nd of
2021. The Nasdaq Composite surged 1.2%, to its 31st record close of the
year, while the Dow Jones
Industrial Average rose 0.7%. The Russell
2000 jumped 2.8%. For the
week, the S&P 500 was up 1.5%, the Dow was up nearly 1%, and the Nasdaq,
up 2.8%. The Russell 2000 was up 5% for the week—its
biggest weekly percentage gain since mid-March. Treasury
yields rose and then fell on Powell’s speech, with
the yield on the benchmark 10-year note settling at 1.311%. The dollar was weaker against major currencies. For the
week, the WSJ Dollar Index had its sharpest percentage decline since early
May. While Powell
appeared to put markets at ease, ultimately he said very
little about the central bank’s plans for winding down its crisis stimulus
program. Lisa Beilfuss of Barron's had this
to say about his speech: Powell gave
a speech that offered something for everyone: Inflation is hot but temporary;
hiring is strong but could be better; the Delta variant may or may not be an
economic problem. He meanwhile avoided answering investors’ biggest
questions: When will the Federal Open Market Committee start trimming its
$120 billion in monthly Treasury and mortgage-backed securities purchases,
and how long will the wind-down take? He tried to
have his cake and eat it too,” says Joe Brusuelas, chief economist at RSM.
“And this time, he gets to.” At least we
can wipe today’s date off the calendar of things for the market to worry
about. The next day with a big red circle is next Friday, with the August
employment report looming, Scott
Anderson, chief economist of the Bank
of the West, says the jobs
data “could be the deciding factor on the taper announcement timing.
“ If the
August employment report comes in hot, a September FOMC taper announcement is
possible. However, our forecast is for a slowdown in U.S. job creation in
August, which should push the formal taper announcement into November, with
the actual tapering of asset purchases beginning in December. Given that
the Fed has emphasized progress in labor market conditions and the fact that
the data comes before the Labor Day weekend, we could see a sharp market
reaction next week—even with the knowledge that pandemic crisis unemployment
benefits were still in place in August. The consensus estimate is
currently for a gain of about 780,000 jobs to nonfarm payrolls, after an
increase of 943,000 in July. Watch our TV
show on Fox Business Fridays at 10 p.m. or 11:30 p.m. ET; Saturdays at 10
a.m. or 11:30 a.m. ET, or Sundays at 7 a.m., 10 a.m. or 11:30 a.m. ET. This
week, an interview with Barron's Roundtable member Scott
Black. |
|
|
DJIA:
+0.69% to 35,455.80 The Hot
Stock: Occidental
Petroleum +6.9% Best Sector:
Energy +2.7% |
No comments:
Post a Comment