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.