Stocks started the final session of the week on an upbeat note, buoyed by Fed Chair Powell's dovish comments at the Jackson Hole Economic Symposium. Powell hinted at a rate cut in September, stating, "the time has come for policy to adjust."
Despite Powell noting "downside risks to employment," the market remained positive with robust buying activity. A mid-session lull saw major indices trading at intraday lows due to lagging mega-cap stocks, but they ultimately closed near session highs.
The Dow Jones Industrial Average rose 1.1%, the S&P 500 gained 1.2%, the Nasdaq Composite climbed 1.5%, and the Russell 2000 outperformed with a 3.2% jump.
All 11 S&P 500 sectors closed higher, led by real estate (+2.0%), consumer discretionary (+1.7%), information technology (+1.7%), energy (+1.5%), and materials (+1.4%). The consumer staples sector recorded the smallest gain, up 0.2%.
Strength in the semiconductor space and a drop in Treasury yields also supported the upside bias. The PHLX Semiconductor Index (SOX) gained 2.8%. The 10-year note yield fell six basis points to 3.81%, and the 2-year note yield, sensitive to changes in the fed funds rate, declined ten basis points to 3.91%.
Price action in Treasuries was influenced by a stronger-than-expected new home sales report for July.
- Nasdaq Composite: +19.1% YTD
- S&P 500: +18.1% YTD
- S&P Midcap 400: +11.3% YTD
- Russell 2000: +9.5% YTD
- Dow Jones Industrial Average: +9.3% YTD
Reviewing today's economic data:
- New home sales surged 10.6% month-over-month in July to a seasonally adjusted annual rate of 739,000 units (consensus 628,000) from an upwardly revised 668,000 (from 617,000) in June. Year-over-year, new home sales were up 5.6%.
- The key takeaway is that new home sales, tabulated when contracts are signed, saw an encouraging jump in July coinciding with a drop in mortgage rates.
Looking ahead to next week, the report on Durable Goods Orders for July will be released on Monday.
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Today's News
Nvidia (NVDA, Financial) is set to report its fiscal second-quarter results on August 28, and analysts from Wedbush Securities are calling it the "most important" event for the technology sector in years. Nvidia is expected to deliver another stellar performance, reinforcing its dominance in artificial intelligence and GPU markets. The consensus among analysts is that Nvidia will earn $0.64 per share on $28.67B in revenue.
Federal Reserve Chair Jerome Powell announced that the central bank is prepared to start cutting interest rates from their current two-decade high. This statement was made at the Jackson Hole Economic Symposium, where Powell emphasized the need for policy adjustments. The probability of a 50-basis point cut increased to 32.5%, signaling a potential shift in monetary policy that could impact various sectors, including real estate and technology.
Congresswoman Marjorie Taylor Greene disclosed new investments in several tech companies, including Nvidia (NVDA, Financial), Intel (INTC, Financial), Amazon (AMZN, Financial), and Alphabet (GOOG, Financial) (GOOGL, Financial). These purchases, ranging between $1,001 and $15,000 each, were made on August 21. Greene also invested in FedEx (FDX, Financial) and Kinder Morgan (KMI, Financial), adding to her previous stakes in Microsoft (MSFT, Financial) and Qualcomm (QCOM, Financial).
Qualcomm (QCOM, Financial) announced the acquisition of Sequans Communications' (SQNS) 4G Internet of Things (IoT) technologies. The acquisition aims to strengthen Qualcomm's Industrial IoT portfolio by providing low-power solutions for reliable and optimized cellular connectivity. Financial terms were not disclosed, but Sequans will retain a license for its 4G IoT technology and maintain full ownership of its 5G technology.
Alibaba Group (BABA, Financial) received shareholder approval to upgrade its Hong Kong listing to primary status, effective August 28, 2024. This move aims to attract significant investments from mainland China and allows Alibaba to participate in the 'Stock Connect programme,' linking Shanghai and Shenzhen bourses to the Hong Kong stock exchange. The upgrade comes amid geopolitical tensions and aims to boost the company's growth prospects.
Jefferies analysts outlined 10 actionable policies and their stock implications if Kamala Harris wins the presidential seat. Policies include restoring the top individual income tax rate and setting new rules for food and grocery companies. Potential winners include Guild Holdings (GHLD) and LoanDepot (LDI), while losers could be Costco (COST) and The Hershey Co. (HSY).
Steward Health Care, which filed for Chapter 11 bankruptcy in May, sued its landlord, Medical Properties Trust (MPW), alleging interference in the sales of Steward's hospitals. Steward claims that MPT's valuation of its real estate has thwarted hospital sales. The case is currently being reviewed by U.S. Bankruptcy Judge Christopher Lopez.
Uber Technologies (UBER, Financial) announced a partnership with General Motors' (GM) Cruise to deploy autonomous vehicles on its platform by 2025. The initiative will likely start in one city, utilizing Cruise's fleet of autonomous Chevrolet Bolts. Uber already has an existing partnership with Waymo, and this new collaboration aims to enhance its autonomous vehicle capabilities.
Meta Platforms (META, Financial) has reportedly scrapped plans for a high-end mixed-reality headset to compete with Apple's (AAPL, Financial) Vision Pro. The decision was influenced by the high cost and complexity of producing premium micro-OLED screens. Meta's project, known as "La Jolla," aimed to launch in 2027 but has been halted due to these challenges.
Roku (ROKU, Financial) saw its stock rise by 4% in premarket trading after Guggenheim Securities upgraded its rating to Buy from Neutral. The upgrade is based on Roku's progress in broadening video inventory advertising sales and improving home screen monetization. Analysts expect these initiatives to drive revenue acceleration, bolstering investor confidence ahead of the company's third-quarter earnings report.
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