[New York Stock Market] Rise Ahead of Powell's Jackson Hole Speech... Nasdaq Up 1.67%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York Stock Exchange closed higher on the 25th (local time) as investors closely watched the Jackson Hole meeting. Following remarks from Federal Reserve (Fed) officials, market participants are expected to seek hints about the future path of interest rate hikes from Fed Chair Jerome Powell's speech scheduled for the next day.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,291.78, up 322.55 points (0.98%) from the previous session. The large-cap S&P 500 index rose 58.35 points (1.41%) to 4,199.12, while the tech-heavy Nasdaq index gained 207.74 points (1.67%) to close at 12,639.27.

All sectors of the S&P 500 advanced, with technology stocks showing strong performance. Meta closed up 3.38% from the previous session. Apple (+1.49%), Amazon (+2.62%), Netflix (+1.90%), Alphabet (+2.59%), and Microsoft (+1.11%) also rose collectively. However, Tesla fell 0.35% after its 3-for-1 stock split the day before.

Semiconductor stocks were also strong. Nvidia rose 4.01% despite releasing earnings below expectations after the previous day's close. Intel jumped 3.04%, and AMD surged 4.80%. Financial stocks such as JPMorgan Chase (+2.37%), Bank of America (+1.80%), Citigroup (+2.06%), and Wells Fargo (+1.68%) also rallied.

Reports that the U.S. and China are close to an agreement on accounting oversight of Chinese companies listed on the New York Stock Exchange caused Alibaba to jump nearly 8%. Other Chinese companies also soared, including TAL Education (+9.09%), Didi Global (+3.44%), and Gaotu Techedu (+4.58%).

Meanwhile, Peloton plunged more than 18% after announcing a sharp decline in quarterly sales. Salesforce slipped 3.39% after lowering its earnings guidance the previous day. Snowflake soared over 23% on earnings that significantly exceeded expectations.

Investors are awaiting Fed Chair Powell's Jackson Hole speech scheduled for the next day. On the morning of the 26th, the Personal Consumption Expenditures (PCE) index, one of the indicators closely monitored by the Fed, will also be released. Through this, investors are expected to seek clues about the Fed's future interest rate hike magnitude. Liz Young, head of investment strategy at SoFi, said, "The market is trying to determine whether we are in the middle or the late stage of the cycle," adding, "We are waiting to see what news will come from Chair Powell's speech tomorrow."

Fed officials, in interviews with foreign media on this day, agreed that more data needs to be reviewed before the September meeting but emphasized the need to continue raising interest rates to curb inflation.

James Bullard, president of the Federal Reserve Bank of St. Louis and a known hawk, said, "We are moving in the right direction" and stressed additional tightening to reach the 2% inflation target. Raphael Bostic, president of the Atlanta Fed, said it is still too early to say inflation has peaked and mentioned that a 0.75 percentage point hike is possible depending on the data. Esther George, president of the Kansas City Fed, said, "Inflation remains high," adding, "We saw some easing in July, but inflation is still broad-based. There is more to be done."

According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds (FF) futures market currently prices in a 64.5% probability that the Fed will raise rates by 0.75 percentage points in September. This would mark the third consecutive "giant step" (0.75 percentage point hike). This probability has increased from 41% a week ago and 61% the day before. Conversely, the chance of a 0.5 percentage point hike has dropped to around 35%.

These investor bets suggest that even if the economy slows, the Fed will maintain its current tightening stance to reduce inflation. Karen Firestone of Aureus Asset Management said, "If inflation becomes entrenched, what the Fed says won't matter." Tony Crescenzi, a portfolio manager at PIMCO, stated, "Even if inflation slows, the Fed needs to maintain an aggressive stance on rate hikes."

U.S. economic indicators released on this day showed improvement compared to previous data. The preliminary estimate for U.S. real Gross Domestic Product (GDP) growth in the second quarter (April-June) was -0.6% annualized, an improvement from the previously released flash estimate of -0.9%. Weekly initial jobless claims in the U.S. decreased by 2,000 from the previous week, marking two consecutive weeks of decline and coming in below market expectations.

In the New York bond market, the 10-year Treasury yield fell. The 10-year yield dropped from around 3.10% to about 3.02%. The yield curve inversion, where long-term yields fall below short-term yields, continues. The dollar declined slightly. The Dollar Index, which measures the dollar's value against six major currencies, stood at 108. The euro rose 0.08% against the dollar to $0.9975.

Oil prices fell amid attention to the possibility of restoring the Iran nuclear deal. On the New York Mercantile Exchange, October West Texas Intermediate (WTI) crude oil closed at $92.52 per barrel, down $2.37 (2.50%) from the previous session.

This content was produced with the assistance of AI translation services.