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U.S. Stocks Rise Post-Powell’s Speech Amid Rate Hike Speculations

Markets react positively as Powell discusses inflation and interest rates.


Powell’s Take on Inflation and Interest Rates

U.S. stocks concluded a turbulent session on the upside this Friday, following Federal Reserve Chair Jerome Powell’s remarks suggesting potential additional interest rate hikes to combat inflation. Powell, during his highly awaited speech at the Economic Policy Symposium in Jackson Hole, Wyoming, also noted the softening of price pressures.

Major Indexes Reflect Market Optimism

Despite initial robust gains, the major U.S. stock indexes fluctuated throughout the day. Preliminary data indicates the S&P 500 rose by 29.01 points (0.66%) to settle at 4,405.32 points. Similarly, the Nasdaq Composite escalated by 125.16 points (0.93%) to reach 13,589.13, and the Dow Jones Industrial Average advanced by 244.58 points (0.73%), finishing at 34,344.00.

Industry Reactions to Powell’s Remarks

Michael Arone, chief investment strategist at State Street Global Advisors in Boston, opined, "Powell is contented with the monetary policy progression and the control over inflation. However, he emphasizes the vigilant observation and the tasks ahead." Consequently, post these remarks, the anticipated rate hike in November witnessed a surge, as per CME Group’s FedWatch tool. Yet, the consensus among traders is the likelihood of the Fed abstaining from a rate increase in September.

Weekly Market Highlights

All primary S&P 500 sectors reported growth, with energy, consumer discretionary, and technology sectors leading. Both the S&P 500 and Nasdaq experienced a weekly rise, with momentum gathering ahead of Nvidia's Q2 results. Nvidia, renowned for its AI-centric chips, presented another optimistic forecast in its recent report.

Varied Performance Among Retailers and Tech

Retail performance post Q2 results showed diversity. Gap shares climbed after surpassing Q2 profit expectations, while Nordstrom observed a dip as it maintained its predictions. In other news, Hostess Brands shares surged after reports of its potential sale surfaced, whereas Marvell Technology's stock declined after announcing decreased Q2 revenues. Hawaiian Electric, amidst the scrutiny for its alleged involvement in the Hawaii wildfires, faced a setback after Maui County's lawsuit.