Shares rose slightly on Friday, with the Dow Jones Industrial Average erasing its 2020 losses and the S&P 500 index on track for another record close, as investors sifted through data on U.S. consumer spending and confidence a day after the Federal Reserve announced a policy change that would allow employment and inflation to get hotter than in the past.
What are the main benchmarks doing?
The Dow DJIA,
rose 93 points, or 0.3%, to 28,586, while the S&P 500 SPX,
rose 11 points, or 0.3%, to 3495. The Nasdaq Composite COMP,
advanced 47 points, or 0.4% to 11,673.
On Thursday, the Dow Jones rose 160.35 points, or 0.6%, to close at 28,492.27. The S&P 500 finished with a gain of 5.82 points, or 0.2%, to 3,484.55, a record close. The Nasdaq, which closed at a record Wednesday, lost 39.72 points, or 0.3%, to close at 11,625.34.
What drives the market?
The Dow was heading for its third weekly gain in four weeks on Friday afternoon, led by Intel INTC,
and Walmart WMT,
, before a restructuring of the index on Monday.
Stocks posted a volatile performance Thursday after Federal Reserve Chairman Jerome Powell announced in an appearance at the annual Jackson Hole Monetary Symposium that the Fed was shifting to an average inflation targeting policy that would effectively see policymakers end the practice of preventive hikes. interest rate to avoid inflation.
Should know:The Fed may never hike rates again. Here are the growth values for the long term, according to a strategist
“Whatever the measure, valuations are in nosebleed territory, but there is this ingrained opinion that the Fed is backing you, that the polls are bogus, and that there will be a Trump sweep, and that a vaccine is coming this fall, ”said David Rosenberg, a longtime strategist now running his own company, Rosenberg Research. “These are hardened views in the market. This is what sets off this continuous rally in risk stocks. “
Reflation moves in the market, including the steepening of the yield curve and the surge in bond yields to a peak of about two months, are “likely temporary, but may still have more wiggle room in the near term.” Rosenberg said in an interview with MarketWatch.
The Fed’s new stance could just as easily be “a blatant attempt to steepen the yield curve to help bank stocks,” Rosenberg noted. “They’ve helped everyone – growth stocks, credit markets, everything except value trading, which needs a steeper yield curve. They did not hesitate to want to stimulate financial conditions. I’m not optimistic about the economy going into Q4, and I don’t think the Fed will be successful in generating sustained inflation any more than it has in the past 12 years. But I think it’s a great buying opportunity for Treasurys.
See:“The stock market no longer thinks it needs the economy if it has the Fed,” says David Rosenberg.
Cleveland Federal Reserve Chairman Loretta Mester in a television interview on Friday said the economic recovery from the pandemic-induced recession “is likely to be slow.” “There’s more pain out there that we’re going to have to support the economy,” Mester said.
Data shows that personal income in the United States rose 0.4% in July, while consumer spending rose 1.9%. Economists polled by MarketWatch expected revenues to fall a further 0.4% after falling 1.1% in June. Spending is expected to rise 1.6% after rising 5.6% in June.
Spending on durable goods is up 12.2%, while spending on services is down 9.3% for a net deficit of 4.6% of total consumer demand, said Aneta Markowska, economist Chief Financial Officer at Jefferies, adding that the variation in spending patterns explains “part of the disconnect between the stock market and the economy, the former being much less exposed to the service sector than the latter. “
Lily:Stop saying stocks aren’t the economy
The final reading of the University of Michigan Consumer Confidence Index in August is 74.1 compared to a preliminary reading of 72.8 and 72.5 in July.
Which companies are targeted?
- Coca-Cola Co.
Friday announced a reorganization and said it would offer voluntary job cuts to 4,000 workers in the United States, Canada and Puerto Rico. Shares rose 2.3%.
- Actions of HP Inc. HPQ,
rose 6.6% after reporting third-quarter fiscal year sales that exceeded Wall Street estimates of $ 1 billion, boosted by a surge in personal computer sales inspired by a pandemic.
- Dell Technologies Inc. DELL,
shares rose more than 6% after beating earnings estimates.
- Visa Inc.
stocks climbed and looked set to break their first close to high since February.
- Actions of Workday Inc.
climbed more than 14% after beating earnings forecasts, boosting forecasts and announcing a new co-CEO.
- Okta Inc.
shares were down 3% after the identity management services company beat Wall Street estimates on its quarter and outlook.
- Moderna Inc.
The shares dropped early gains after the company said it was in talks with Japan’s Ministry of Health, Labor and Welfare to potentially sell 40 million or more doses of mRNA-127, its COVID-19 vaccine.
- Shares listed in the United States of Nio Inc
, a Chinese automaker of autonomous vehicles, fell nearly 6% after the company announced an offer of 75 million US depositary shares.
- Actions of Tesla Inc.
fell 0.3% on the last day before the company’s stock split by five to one.
What are other markets doing?
Shanghai Composite SHCOMP,
rose 1.6% and the HSI Hang Seng Hong Kong index,
The Stoxx Europe 600 SXXP,
closed at 368.80, down 0.5%, while the UK benchmark FTSE 100 UKX,
lost 0.6% to close at 66.32.
The yield of the 10-year Treasury bill TMUBMUSD10Y,
was down 2 basis points to 0.737%. Bond prices move inversely with yields.
GCZ20 gold futures,
rose $ 42.30, or 2.2%, to $ 1,974.90 per ounce.
The ICE US Dollar DXY index,
which tracks the currency against a basket of six big rivals, fell 0.6%.
Lily:There will be no V-shaped recovery for consumer sentiment, says DataTrek