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Weekly Market Recap: Fed Insights Drive Market Movements Amid Economic Data Thumbnail

Weekly Market Recap: Fed Insights Drive Market Movements Amid Economic Data

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Market Overview

Markets rallied ahead making up most of the losses seen earlier this month. The S&P 500 and Nasdaq Composite each climbed 1.5%, and the Dow Jones Industrial Average increased by 1.3%. European markets also saw gains, with the STOXX 600 rising 1.31%, driven by expectations of rate cuts from the European Central Bank (ECB). In Asia, markets were broadly higher, supported by mixed but generally positive economic data. Japan saw gains on stable CPI and manufacturing data, while China and Hong Kong closed higher despite some regional economic challenges.

Federal Reserve Insights and Economic Roundup

Fed Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium was a focal point, with Powell indicating that "the time has come for policy to adjust" due to the evolving economic landscape. His dovish tone suggested that rate cuts might be imminent, reflecting concerns about the labor market's fragility. Powell’s emphasis on the labor market and mention of the “transitory hypothesis” highlighted the Fed’s potential shift in policy approach.

Adding to market concerns, a preliminary downward revision of nonfarm payrolls by approximately 800,000 jobs for the 12 months ending in March pointed to a weaker-than-reported labor market. This revision, combined with an increase in jobless claims, bolstered expectations for a rate cut in September, potentially by half a percentage point. The labor market’s perceived weakness and the Fed’s readiness to adjust policy were key themes driving market movements this week.

The Week Ahead

Looking forward, the upcoming week will feature a series of important economic reports:

  • Monday: Durable Goods Orders and Capital Goods Orders (July preliminary)
  • Tuesday: FHFA House Price Index, Case-Shiller Home Price Index (June), and Consumer Confidence (August)
  • Wednesday: MBA Mortgage Applications
  • Thursday: Q2 GDP Annualized, Personal Consumption, GDP Price Index, Core PCE Price Index, and Initial Jobless Claims
  • Friday: Personal Income and Spending, Real Personal Spending, PCE Price Index, Core PCE Price Index, Chicago PMI, and University of Michigan Report (August final)