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Market Snapshot

https://www.briefing.com/stock-market-update

Dow 35455.80 +242.68 (0.69%)
Nasdaq 15129.48 +183.69 (1.23%)
SP 500 4509.37 +39.37 (0.88%)
10-yr Note +5/32 1.307
NYSE Adv 2685 Dec 535 Vol 736.4 mln
Nasdaq Adv 3329 Dec 997 Vol 3.9 bln

Industry Watch
Strong: Energy, Communication Services, Financials
Weak: Health Care, Utilities

Moving the Market

-- S&P 500 and Nasdaq close at record highs after Fed Chair Powell's speech

-- Fed Chair Powell said substantial further progress has been met on inflation but not yet employment: suggests tapering will start later this year

-- Fed Chair Powell differentiates tapering criteria from rate-hike criteria

Powell speech pleases market, S&P 500 and Nasdaq notch record highs
27-Aug-21 16:15 ET
Dow +242.68 at 35455.80, Nasdaq +183.69 at 15129.48, S&P +39.37 at 4509.37

[BRIEFING.COM] The S&P 500 (+0.9%) and Nasdaq Composite (+1.2%) rallied to record highs on Friday, as the market reacted positively to Fed Chair Powell's Jackson Hole speech on the economy and monetary policy. The Dow Jones Industrial Average was the relative underperformer with a 0.7% gain, while the Russell 2000 pulled ahead with a 2.9% gain.

Fed Chair Powell suggested tapering could start by the end of the year since "substantial further progress" has been met on inflation and that "clear progress" has been made on employment. This qualification on employment implied that the Fed chair still needs to assess incoming data on the labor market before committing to a taper timeline.

Fed Vice Chair Clarida and Fed Presidents Bostic, Harker, Mester, and Bullard were largely in agreement with Mr. Powell in separate television interviews (Mr. Bullard preferred to taper immediately). What's more, Fed Chair Powell said the timing and pace of tapering will have no direct impact to the timing of future rate hikes, which will depend on a more careful assessment of the economy.

In other words, the market was okay with the taper talk on the understanding that the Fed isn't in a hurry to taper and that financial conditions will still be accommodative after the Fed stops buying assets.

The equity gains were relatively broad-based: Nine of the 11 S&P 500 sectors finished in positive territory, growth stocks and value stocks rose alike, and advancing issues outpaced declining issues by a 5:1 margin at the NYSE and by a 3:1 margin at the Nasdaq.

The information technology sector (+1.0%) was an influential leader, but the energy sector (+2.6%) increased the most amid higher oil prices ($68.77/bbl, +1.42, +2.1%) and rebound momentum. The health care (-0.2%) and utilities (-0.03%) sectors closed slightly lower.

Pfizer (PFE 46.58, -0.80, -1.7%) and Moderna (MRNA 382.22, -18.08, -4.5%) dragged on the health care sector amid word from the White House Press Secretary that guidance for booster shots will remain at eight months and not five months as reported earlier in the day.

Elsewhere, longer-dated Treasury yields moved lower following Fed Chair Powell's speech and the July Personal Income/Spending report, which included 0.1% decline in real PCE. Inflation pressures continued to run persistently high, but the silver lining was that the core-PCE Price Index was unchanged at 3.6% yr/yr, providing some hope that inflation rates are peaking.

The 10-yr yield decreased three basis points to 1.31%, and the 2-yr yield decreased one basis point to 0.22%. The U.S. Dollar Index decreased 0.4% to 92.68.

Reviewing Friday's economic data:

Personal income was up 1.1% month-over-month in July (Briefing.com consensus +0.2%), bolstered by a 1.0% increase in wages and salaries and a 2.9% increase in personal current transfer receipts (think Child Tax Credit payments). Personal spending increased 0.3% (Briefing.com consensus +0.4%), but real PCE declined 0.1% with the PCE Price Index up 0.4% (Briefing.com consensus +0.4%). The core PCE Price Index, which excludes food and energy, increased 0.3% (Briefing.com consensus +0.3%).
The key takeaway from the report is twofold: (1) the decline in real PCE will be a drag on Q3 GDP forecasts and (2) inflation pressures continue to run persistently high. The PCE Price Index was up 4.2% year-over-year, versus 4.0% in June, and the core PCE Price Index held steady at 3.6%.
The final University of Michigan Consumer Sentiment Index for August checked in at 70.3 (Briefing.com consensus 70.7), nearly even with the preliminary reading of 70.2. The final reading for July was 81.2. The downturn from July was one of the largest losses since 1978.
The key takeaway from the report is the recognition that higher inflation trends have led to a worsening in sentiment regarding personal financial prospects.
The Advance report for International Trade in Goods for July showed a deficit of $86.4 billion, versus a revised $92.1 billion (from $91.2 billion) in June. The Advance report for Retail Inventories for July increased 0.4%, while the Advance report for Wholesale Inventories for July increased 0.6%.

Looking ahead, investors will receive Pending Home Sales for July on Monday.

S&P 500 +20.1% YTD
Nasdaq Composite +17.4% YTD
Dow Jones Industrial Average +15.8% YTD
Russell 2000 +15.3% YTD

Crude futures settle 10% higher for the week
27-Aug-21 15:30 ET
Dow +256.76 at 35469.88, Nasdaq +196.95 at 15142.74, S&P +41.52 at 4511.52

[BRIEFING.COM] The S&P 500 is up 0.9% to trade at session, and record, highs.

One last look at the sectors shows energy (+2.6%) still in the lead, but the information technology sector (+1.0%) is one of the more influential gainers given its top-weighted position in the S&P 500. The health care sector (-0.1%) is down slightly.

WTI crude futures settled higher by 2.1%, or $1.42, to $68.77/bbl. For the week, crude futures were up 10.5%.