Indices
Dow 45,631, +685or+1.52%.
Nasdaq 21,497, -125or -0.58%.
S&P 6,466, +17or +0.26%.
MSCI EAFE 2762.85, +22.64or +0.83%.
USD10Y 4.26%, -6.8bpor -1.57%.
WTI Crude $63.66 bbl, +$0.86or +1.37%.
Powell Clears the Way
It was a fairly sleepy week filled with mixed messages from retail earnings until Fed Chair Jerome Powell stepped to the podium and gave a very dovish speech at the Jackson Hole Economic Symposium on Friday. His comments were widely interpreted as signaling at least a 25bp cut in the Fed discount rate at the Fed’s next meeting on September 17. As a result, markets ripped higher going into the weekend. Probability markets now forecast an 86.3% chance of a rate cut in September vs only a 61.3% chance a month ago.
As mentioned above, almost all the retailers that reported earnings delivered mixed results; Walmart (WMT) missed on earnings but beat on revenues and increased their guidance; Home Depot (HD) missed on both top and bottom-line targets but reaffirmed full year guidance; Lowe’s (LOW) beat earnings, and reported in line revenues; BJ Wholesale (BJ) beat earnings but missed on revenues. Target (TGT) beat their expectations and announced a new CEO, but revenues were down 1% year over year, and the market punished the stock. TJX Companies (TJX) seemed to be the only clear-cut winner, beating their expectations, raising guidance and trading up on the news.
The Upcoming Week: Aug 25 – Aug 29
Earnings slow to a crawl with Nvidia (NVDA) the only real market mover reporting this week. Kohl’s (KSS) also reports.
The economic calendar is light but contains the all-important July Personal Consumption Expenditure (PCE) report on Friday. Market participants will be laser focused on this report to judge whether inflation can still be considered benign and controlled (thus confirming Powell’s stance from his speech Friday) or whether the Producer Price Index (PPI) report from two weeks ago was a harbinger of surging prices and thus throwing into doubt the assumed September rate cut.
Economic Calendar
Monday – N/A. Earnings: N/A.
Tuesday – July Durable Goods Orders, August Consumer Confidence. Earnings: N/A.
Wednesday – N/A. Earnings: Nvidia (NVDA), Kohl’s (KSS),
Thursday – Initial Jobless Claims, First revision Q2 GDP. Earnings: N/A.
Friday – July PCE. Earnings: N/A.
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Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets...Bitcoin, Ethereum, Solana, ACHR, BITB, HPE, ITIB, NVDA, and RIVN.