Wall Street had its best week since November, with the S&P 500 rising 0.2% on Friday and pulling back within 2% of its all-time high. The Dow Jones Industrial Average gained 96 points, or 0.2%, and the Nasdaq composite also added 0.2%. Treasury yields eased after mixed reports on the U.S. economy, with better-than-expected reports earlier in the week boosting optimism. U.S. consumers were found to be feeling better about the economy than expected, which is significant as their spending makes up the bulk of the economy.
The market had a manic week where strong economic data helped recover from a scary run, with the S&P 500 briefly dropping close to 10% below its record last week. Concerns remain about the strength of the U.S. economy following a weak hiring report last month, compounded by high interest rates slowing economic growth. The Federal Reserve has been attempting to cool the hot job market and remove upward pressure on inflation. An expected cut to interest rates at the Fed’s next meeting in September is hoped to forestall a potential recession.
Next week, the market’s focus will shift to Jackson Hole, Wyoming, where Federal Reserve Chair Jerome Powell will give a speech. Powell is expected to offer hints about the Fed’s upcoming moves, depending on data reports at the time. Concerns also linger about whether Big Tech stocks, including Nvidia, have been priced too high in the AI craze. Nvidia experienced significant swings on Friday, but technical factors caused by a hike in interest rates by the Bank of Japan also contributed to global market swings.
On Wall Street, H&R Block saw a significant increase, gaining 12.1% after reporting a larger-than-expected profit for the latest quarter. The S&P 500 closed at 5,554.25, the Dow gained 96.70 to 40,659.76, and the Nasdaq composite added 37.22 to 17,631.72. In the bond market, the yield on the 10-year Treasury fell to 3.88%, while the two-year yield fell to 4.05%. In stock markets abroad, Japan’s Nikkei 225 jumped 3.6% to cap its best week in over four years, rebounding from sharp losses the week before.
Overall, Wall Street remains cautious amidst global market swings and economic uncertainties, with hopes pinned on potential interest rate cuts to sustain economic growth. The upcoming speech by Jerome Powell at Jackson Hole will provide insights into the Fed’s future moves and how it plans to navigate the current economic landscape. Investors will continue to monitor key economic indicators and market trends to gauge the outlook for the financial markets in the coming weeks.
