InfoQuest – The Dow Jones Industrial Average closed higher on Friday (August 23) as comments from Federal Reserve Chairman Jerome Powell reinforced expectations that the Fed is set to cut interest rates in September.
The Dow Jones Industrial Average closed at 41,175.08, up 462.30 points, or +1.14%, the S&P 500 closed at 5,634.61, up 63.97 points, or +1.15%, and the Nasdaq closed at 17,877.79, up 258.44 points, or +1.47%.
All 11 sectors in the S&P 500 closed in positive territory, with real estate up 2.0%, luxury goods up 1.70%, and staples up 0.23%.
Speaking at the Fed's annual meeting in Jackson Hole, Wyoming, Mr. Powell said, “It is time for the Fed to lower interest rates. In the meantime, the risk of accelerating inflation has declined. The Fed does not expect the labor market to weaken.”
Powell’s comments clearly indicate that the Fed is set to cut interest rates in September, the first cut in more than 4 years.
Ryan Detrick, senior market analyst at Carson Group, said Powell has clearly indicated that September will mark the start of a series of rate cuts for the rest of the year.
Large-cap stocks such as Invidia, Apple and Tesla rose further after Powell’s speech. Meanwhile, small-cap stocks and regional banks rose 3.2% and 4.9%, respectively.
As for individual stocks, Workday, a human resources software company, jumped 12%, the biggest percentage gainer on the Nasdaq, after reporting higher-than-expected earnings and announcing plans to buy back $1 billion in shares.
Shares of discount retailer Ross Stores rose 1.8% after the company raised its fiscal 2024 earnings outlook.
In economic data released on Friday, the U.S. Commerce Department reported that new home sales rose 10.6% to a seasonally adjusted annual rate of 739,000 units in July. This was the highest level since May 2023 and above analysts’ expectations of 625,000 units from 668,000 units in June.
This week the Federal Reserve will look at economic data ahead of its September policy meeting. The U.S. Commerce Department will release revised GDP figures for the second quarter of 2024. The personal consumption expenditures price index, an important measure of inflation that can capture changes in consumer behavior, covers prices of goods and services more broadly than the consumer price index (CPI).
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