Wall St ends higher, extending rally ahead of Jackson Hole
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[August 20, 2024] By
Stephen Culp
NEW YORK (Reuters) - U.S. stocks advanced on Monday, building on their
largest weekly percentage gain of the year as investors focused on the
Democratic National Convention and the upcoming Jackson Hole Economic
Symposium.
The tech-heavy Nasdaq led all three major U.S. stock indexes to a higher
close, with help from Nvidia, Microsoft and Alphabet.
The S&P 500 and the Nasdaq extended their winning streak to eight
consecutive sessions, the longest in 2024, as equities continued to
rebound from a steep sell-off two weeks ago driven by recession fears.
The rally builds on the U.S. stock market's biggest weekly gains of the
year, in which the three major indexes jumped between 2.9% and 5.3%.
Recent data has shown consumer resiliency despite economic softening,
boosting expectations that the Federal Reserve will start lowering
interest rates at its September policy meeting by cutting the Fed funds
target rate by 25 basis points.
"What's behind (this rally) is the hope that the spigots will continue
to be open with the Fed potentially cutting rates in September," said
Paul Nolte, senior wealth advisor & market strategist at Murphy &
Sylvest in Elmhurst, Illinois.
"Money is looking for a place to go, and it's going into the equity
markets."
A slim majority of economists polled by Reuters say the Fed will
implement three 25-basis-point rate cuts by the end of the year, and the
economy will probably be able to avoid recession as inflation abates.
The Jackson Hole Economic Symposium kicks off on Thursday, and Fed Chair
Jerome Powell's remarks on Friday will be parsed for clues regarding the
U.S. central bank's path from restrictive to neutral monetary policy.
"I think (Powell) is going to reiterate some of the talking points that
the Fed made, that they're getting a little bit more comfortable with
the fact that inflation is coming down to target," Nolte added. "They're
comfortable with the economy doing reasonably well, and that will be
interpreted by the markets as a door-opener for a September rate cut."
The Democratic National Convention in Chicago, which starts on Monday,
could fuel market volatility that is already heightened due to light,
late-summer trading volume.
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A trader works on the floor at the New York Stock Exchange (NYSE) in
New York City, U.S., July 3, 2024. REUTERS/Brendan McDermid
The CBOE market volatility index a gauge of investor anxiety,
retreated at a record pace last week from a four-year high amid
growing optimism of a soft landing.
Goldman Sachs lowered the odds of a U.S. recession in the next 12
months to 20% from 25% following the latest weekly jobless claims
and retail sales reports.
The Dow Jones Industrial Average rose 236.77 points, or 0.58%, to
40,896.53. The S&P 500 gained 54 points, or 0.97%, at 5,608.25 and
the Nasdaq Composite added 245.05 points, or 1.39%, at 17,876.77.
All 11 of the major S&P 500 ended higher, with communication
services enjoying the biggest percentage gain.
Advanced Micro Devices rose 4.5% after the chipmaker said it plans
to acquire server maker ZT Systems for $4.9 billion to expand its
artificial intelligence portfolio to better compete with Nvidia.
B. Riley Financial slid 5.8%, extending a drop of over 65% last
week. Co-founder and co-CEO Bryant Riley had offered to buy the bank
on Friday after it warned of a hit from its investment in Vitamin
Shoppe-owner Franchise Group.
Quarterly results from cybersecurity firm Palo Alto Networks,
retailer Target and home improvement chain Lowe's are due later this
week.
Advancing issues outnumbered decliners on the NYSE by a 3.54-to-1
ratio; on Nasdaq, a 2.71-to-1 ratio favored advancers.
The S&P 500 posted 32 new 52-week highs and no new lows; the Nasdaq
Composite recorded 105 new highs and 65 new lows.
Volume on U.S. exchanges was 10.30 billion shares, compared with the
12.24 billion average for the full session over the last 20 trading
days.
(Reporting by Stephen Culp; Additional reporting by Shashwat Chauhan
and Johann M Cherian in Bengaluru; Editing by Richard Chang)
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