Anna Moneymaker
U.S. stocks on Friday had moved back into positive territory, as traders digested Federal Reserve chair Jerome Powell’s remarks at the Jackson Hole Symposium which indicated that the central bank was prepared to further hike interest rates if needed.
In what has been a volatile session, Wall Street’s major averages opened higher, but then started to steadily give up their gains during Powell’s speech, before slipping into the red. They have since resumed an upward climb.
By afternoon, the tech-heavy Nasdaq Composite (COMP.IND) had added 0.26% to 13,498.87 points. The benchmark S&P 500 (SP500) was higher by 0.36% to 4,391.93 points, while the blue-chip Dow (DJI) was last up 0.47% to 34,259.21 points.
All 11 S&P sectors – with the exception of Communication Services – were in positive territory, led by Energy and Utilities.
Powell at the symposium called the recent downward move in inflation a “welcome development” but also stressed that it remained too high. “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,” Powell said, adding that policymakers at upcoming monetary policy meetings were “in a position to proceed carefully” while assessing incoming economic data.
“I would describe Powell’s comments as somewhat balanced. It’s too early to say the inflation job is done but he also noted some of the potential slowdown in the pipeline. Basically, he remains data dependent giving himself and the Fed maximum flexibility,” Keith Lerner, co-chief investment officer at Truist, told Seeking Alpha.
Treasury yields were higher after Powell’s remarks. The longer-end 10-year yield (US10Y) was flat at 4.24%, while the 2-year yield (US2Y) – which is more sensitive to imminent rate actions – was up 4 basis points to 5.06%.
“But his comments still suggests rates will be higher for longer and that the market may be pricing in too many rate cuts next year. His comments are contributing to the rise in the 2-year Treasury yield (US2Y) today and the corresponding minor reversal we have seen in the risk assets,” Lerner said.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
“We do not see Powell’s speech as a game changer but it contributes to the likelihood of a continued choppy near term market outlook in a seasonally challenging period with a lack of evident near-term catalysts,” Lerner added.
“‘Higher for longer’ is the somewhat muted message I got from Jackson Hole,” billionaire investor Bill Gross, who is known as the bond king, said on X (formerly called Twitter).
“The curve needs to disinvert but the likely future is for 10-year Treasuries to rise to 4.50 and short rates to remain relatively stable,” Gross added.
Turning to Friday’s active movers, Hasbro (HAS) was the top percentage gainer on the S&P 500 (SP500) after Stifel added the toymaker to a selected list and said it was increasingly bullish on the stock.
Conversely, Ulta Beauty (ULTA) was among the top S&P percentage losers, despite the beauty store chain raising its guidance.
Marvell Technology (MRVL) was the top percentage loser on the Nasdaq Composite (COMP.IND), after the semiconductor firm posted largely in-line quarterly results and guidance. Wall Street debated the company’s opportunities in artificial intelligence (AI) while weighing weakness in its legacy business.
Chip stocks and the technology sector in general this week have failed to get a boost from Nvidia’s (NVDA) blowout results and forecast, with the euphoria around AI having faded.
