Stocks Climbed After Fed Minutes and US Payrolls Revision Signal Rate Cut
Stocks made gains following dovish Federal Reserve minutes and a substantial downward revision of US payrolls, indicating a potential interest rate cut in September. The S&P 500 continued its upward trend in August, with most sectors seeing positive movement. Shorter-term Treasuries performed well, while traders are now predicting over 1 percentage point of rate cuts by the end of 2024.
Traders eagerly awaited Federal Reserve Chair Jerome Powell’s speech in Jackson Hole, as they analyzed the Fed’s latest policy meeting minutes. The minutes revealed a consensus among officials for a potential rate cut in July, leading to heightened expectations for a cut in September.
Experts like Jamie Cox from Harris Financial Group and Bret Kenwell from eToro are confident in a rate cut next month, with the real question being the extent of the cut. The current market sentiment favors a 25 basis-point cut, but a 50 basis-point cut may be more likely given the economic data.
Key corporate highlights include James Gorman heading Disney’s CEO succession committee, Zoom Video Communications beating sales forecasts, and Apple’s App Store restructuring. On the other hand, Snowflake Inc.’s sales outlook and Ford’s electric SUV cancellation affected market sentiments.
The Jackson Hole symposium is set to begin, with Powell’s speech likely to influence market movements. While history shows a slight decline in the S&P 500 during the symposium, experts believe that the market is still poised for growth, especially with the Fed’s planned rate cuts.
Despite the positive market news, the Bureau of Labor Statistics’ revised US payrolls data suggested weaker job growth over the past year than previously reported. This reinforces the Fed’s stance on cutting rates to support the labor market and prevent a further softening of economic conditions.
Experts anticipate continued rate cuts in the future, with a potential for multiple cuts to validate the current cycle. Overall, while central bankers are focused on data-driven decisions, market conditions remain favorable for stocks, particularly those in the quality growth sector.
Stay informed with upcoming economic events, including Eurozone PMI data, US jobless claims, and Japan’s CPI release. Market movements continue to be influenced by factors such as currencies, cryptocurrencies, bonds, and commodities.
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