Federal Reserve Board Chairman Jerome Powell held a news conference at the Federal Reserve Board Building in Washington on Tuesday, July 31, 2024. The event was photographed by Jose Luis Magana for the Associated Press.
Stocks closed the week strong on Friday, with a significant rally on Thursday helping the S&P 500 and Nasdaq Composite recover from early August losses. This rebound secured the year's best week for major indexes and marked the most significant weekly gain since November.
After a more than 2% surge on Thursday, the Nasdaq rose by 0.2% on Friday. Similarly, both the S&P 500 and Dow Jones Industrial Average recorded gains of about 0.2%, capping off a week of positive momentum.
Investors faced a quiet day on Friday, with the main economic data release showing a slight improvement in consumer sentiment in August, breaking a five-month streak of declines.
Thursday's gains were driven by strong retail sales figures and an encouraging earnings report from Walmart, which eased concerns about a potential recession that had sparked the market's earlier decline. Walmart’s CFO noted that consumer behaviour remained steady throughout the second quarter, dispelling fears of a slowdown in July and maintaining a positive outlook for the remainder of the year.
In light of the positive data, investors have adjusted their expectations regarding potential interest rate cuts by the Federal Reserve. Data from CME Group now shows a 66% probability of a 0.25% rate cut next month, while the chances of a 0.50% cut have decreased to 33%. Earlier in the week, there was near certainty that a more significant 0.50% cut was necessary.
The next major event for investors will be Federal Reserve Chair Jay Powell’s speech at the annual Jackson Hole Symposium next Friday, which could offer further insights into the Fed's plans for interest rates.
In other market news, Fubo TV shares surged by 22% after a judge blocked the launch of Venu, a sports streaming service set to debut this month. The ruling was a significant win for Fubo, which had sued to prevent the platform’s launch, arguing that it would stifle competition in the sports streaming market. This decision could delay Venu's launch, especially with the upcoming football season.
Meanwhile, gold prices soared above $2,500 an ounce for the first time, driven by concerns over high inflation, strong demand from India, and global geopolitical risks. Andrew Critchlow of S&P Global Commodity Insights highlighted that gold remains a key hedge against inflation and political uncertainty, with demand from India playing a crucial role in driving prices higher.
Looking ahead to next week, the economic calendar is relatively quiet, but investors will be paying close attention to Fed Chair Powell’s speech at Jackson Hole and the release of minutes from the July Federal Open Market Committee meeting. These events could clarify the Fed’s approach to interest rates in the coming months.
In technology, Nvidia's upcoming earnings report could be a major catalyst for the sector. While tech stocks have rebounded recently, Nvidia's performance will be closely watched as it could influence the broader AI trade. Despite recent gains, investors are cautious, as Nvidia’s growth may face tough comparisons in the coming quarters.
