This past week was yet another consequential one for the markets, highlighted by indications that the Fed might be ready to lower interest rates.
On Wednesday, the Fed released its minutes from the July meeting. One key takeaway is that many voting members are still concerned about inflation and the impact that tariffs are going to have on the labor market. However, there was a consensus that there is enough evidence available to support rate cuts at some point this year.

The minutes also showed that higher inflation was a bigger concern compared to higher unemployment. Therefore, rate cuts will likely be a tool to keep prices down even if a recession is the result of such a tactic.

On Thursday, unemployment claim data was released and revealed that 235,000 people applied for benefits compared to an expected 226,000 over the past seven days. Also, the Flash Manufacturing PMI and Flash Services PMI reports came out. Manufacturing came in at 53.3 compared to an expected 49.7 whereas services came in at 55.4 compared to an expected 54.2.

On Friday, Jerome Powell spoke at the Jackson Hole Symposium, stating the Fed was meeting its dual mandate. He mentioned that employment was close to capacity and inflation for the moment was manageable. Overall, his comments seemed to add credence to the idea that cuts were coming even if he didn’t seem all that excited about doing so.

The S&P 500 closed the week up .25 percent to finish at 6,466. This represented an increase of just under 16 points since the start of trading on Monday. The market made its low of the week on Wednesday when it dipped to 6,351 before reversing and hitting a high of 6,477 on Friday. The index is currently up 2 percent in August and just over 16 percent over the past 12 months.

The Dow was up 1.51 percent this week to close at 45,631 at the close of trading on Friday. This was an increase of 680 points for an index that spent most of the week in the red before gaining over 800 points on the final day of the trading week. The index made its low of the past five days on Thursday when it fell to 44,685. On Friday, it made its high when it peaked at 45,751. In August, the Dow has gained roughly 2.5 percent and is up 12 percent over the past 12 months.

Finally, the Nasdaq was down about 122 points this week to close at 21,496. On Monday, the index made its high of the week at 21,625 before trending down the rest of the week. On Wednesday, the Nasdaq made its weekly high when it dipped to 20,962. Despite the weekly loss, the index is up about 2 percent over the past month.

In international news, Canada announced Tuesday morning that inflation was up .3 percent over the past month and hit 3.1 percent on an annual basis. Tuesday night, New Zealand announced that it would lower its key interest rate by 25 basis points to 3 percent. On Wednesday morning, Great Britain announced that inflation in that nation hit 3.8 percent on an annualized basis.

This coming Thursday will have initial GDP numbers for the second quarter being released. The PCE Price Index comes out on Friday. International traders may be interested in the Australian CPI release on Tuesday night as well as the Canadian GDP release on Friday morning.

The past week offered a number of data points that offered market participants some level of clarity about the future. Of course, what that clarity may be certainly differs depending on what your interpretation of the data is and whether you happen to be a FOMC voting member.

On Tuesday, inflation data for the previous month came out, which was met with a sigh of relief from Wall Street. Annually, the inflation rate stands at 2.7 percent. For the month, Core CPI increased .3 percent while overall CPI increased by .2 percent. The figures were in line with expectations.

The fact that inflation met expectations raised the likelihood of a rate cut in September. It also raised the likelihood of rate cuts taking place in October and December. This was because the relatively calm number was taken as a sign that tariffs weren’t going to do much to reignite inflation. Ultimately, the Fed could now confidently take the data at face value and adjust monetary policy accordingly.

On Thursday, the Price Producers Index (PPI) came out, and it found that prices rose much higher than expected in July. In July, both Core PPI and overall PPI were up by .9 percent compared to an anticipated increase of .2 percent. The result caused some to rethink the idea that a rate cut could happen in September, however, the odds are still in favor of that happening.

Also on Thursday, it was revealed that 224,000 people filed for unemployment benefits over the past week. This was roughly the number expected prior to the report’s release that morning.

On Friday, retail sales data was released, and it found that core retail sales were up .3 percent while overall sales were up .5 percent. Core retail sales were in line with expectations while overall sales were expected to rise .6 percent. In addition, the University of Michigan released its consumer sentiment and inflation expectation reports. Consumer sentiment came in at 58.6 compared to an expected 61.9 while inflation expectations were 4.9 percent.

The S&P 500 closed up 60 points this week to finish at 6,449. This represents a gain of .95 percent for the index that is again flirting with new all-time highs. The market made its low of the week on Monday afternoon when it dipped to 6,366. On Wednesday morning, the index made its weekly high at 6,472 before going into a trading range for the following three days.

As with the S&P, the Dow was up this week having gained 736 points to close at 44,946. This was a gain of 1.66 percent for the index that is now up 1.45 percent since August 1st. For the week, the index made its low on Monday afternoon when it dipped to 43,971. On Friday morning, it made its high of the week at 45,084 before reversing slightly to close out the day.

The Nasdaq was up .49 percent this week to close at 23,712, which was a gain of 116 points. The index is up over 4 percent over the past month and is up 21.55 percent since this time last year. This week, the index made a low of 23,489 on Monday morning and a high of 23,949 on Wednesday morning.

International traders were likely interested to hear that the Royal Bank of Australia (RBA) cut rates by 25 basis points on Tuesday morning. The RBA cited decreasing inflation as the reason for the cut, and it says that the economic outlook for the rest of the year is rather soft. Great Britain announced on Thursday morning that GDP was up .4 percent over the past month, which beat estimates of a .2 percent increase.

The upcoming week will surely be another interesting one as Fed meeting minutes are scheduled for release on Wednesday afternoon. Flash Services PMI and Flash Manufacturing PMI reports are also due out, while the Jackson Hole Symposium takes place on Thursday and Friday.