Stocks Up On Friday, S&P And Nasdaq Close Higher For The Week Image: Bigstock Stocks closed higher on Friday, and mostly higher for the week. While the Dow was down -0.44% on the week, the S&P was up 0.82%, and the Nasdaq gained an impressive 2.25% for the week. Friday, however, was a volatile day. It started in the green. But then went negative once Fed Chair, Jerome Powell, spoke at Jackson Hole, and suggested more rate hikes might be needed (how is that a surprise?), but then quickly recovered and ended closer to their highs of the day. Mr. Powell on Friday said "although inflation has moved down from its peak – a welcome development – it remains too high." He followed that with "we are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective." But he was also quick to say that the Fed will "proceed carefully," while acknowledging the risks of "doing too little" to "allow above-target inflation to become entrenched," and "doing too much" which could "do unnecessary harm to the economy." Again, no surprises. The Fed will proceed cautiously. They will be data driven. They are intent on getting inflation lower. But do not want to needlessly tank the economy while doing so. All in all, it still looks like the Fed is near the end of their rate hike cycle, give or take another rate hike or two (or none). We'll get a better feel for that this Friday when the Personal Consumption Expenditures (PCE) index comes out. This is the Fed's preferred inflation gauge. Last month's report showed continued easing with the headline rate coming in at 3.0% y/y vs. the previous month's 3.8%. And the core rate (ex-food & energy) declined to 4.1% y/y vs. the previous month's 4.6%. Another month of moderation would bolster the outlook for those looking for a pause on rates on September 19-20 (the next FOMC meeting), while a lack of easing, or an increase in inflation would bolster the outlook for those expecting a hike. The PCE index will be the main event this week (on Friday). In the meantime, the market will try and build on last week's gains this week, and put the pullback behind us. See you tomorrow, Kevin Matras Executive Vice President, Zacks Investment Research |
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