Wall closed with gains in anticipation of Powell’s speech

Wall Street’s stock indexes closed on a positive note on Wednesday, with investors moving cautiously as the days approach for central banker Jerome Powell’s speech at the Fed conference in Jackson Hole.

In particular, Mr Dow Jones closed with an increase of 59.64 points or 0.18% at 32,969.23 points and the S&P 500 strengthened by 12.77 points or 0.31% to 4,141.50 points. In the meantime, Mr Nasdaq added 50.23 points, or 0.41%, to 12,431.53.

Of the 30 Dow stocks, 18 closed in the positive and the rest in the red. Gains were led by shares of Salesforce, Boeing and Walt Disney with gains of 2.63%, 2.22% and 1.39% respectively. Conversely, the losses were led by the shares of Dow Inc., Walgreens Boots Alliance and Caterpillar, with a drop of 2.50%, 1.79% and 1.53% respectively.

The Dow and S&P 500 were down for a third straight session yesterday, albeit amid relatively limited volumes, and the tech-weighted Nasdaq Composite finished around unchanged,

Tellingly, after rallying over 9% in July, the S&P 500 is essentially unchanged for the month.

Investors are looking ahead to the Fed’s annual three-day meeting in Jackson Hole, Wyoming, which begins on Thursday, while central banker Jay Powell’s speech is scheduled for Friday.

The bullish reaction in July was largely based on the majority of investors’ interpretation of Powell’s statements after the latest giant rate hike of 75 basis points, that the Fed intends to slow down its monetary policy tightening.

After all, in recent weeks bets on Fed rate futures have been swinging between the possibility of another brutal 75 basis point hike or a softer 50bp.

“Markets will remain in cloudy waters until Powell’s speech in Jackson Hole on Friday,” said Edward Moya, senior analyst at Oanda.

According to him, the central banker “may struggle to convince markets that he is comfortable with tightening policy that will cause a recession. The economy is clearly slowing, but it is still too early for the Fed to signal that it is less aggressive in its politics”.

For his part, renowned economist Mohamed El Erian said yesterday that Jerome Powell has an opportunity to bring investors on board with the Fed’s agenda to reduce inflation.

“Chairman Powell has two choices: either he’s going to let this disconnect continue, or he’s going to try to fix it. And if he tries to fix it, he’s either going to defy the market’s expectations, or he’s going to admit that the market is right because he’s going to we have a significant economic slowdown. It’s up to him,” he said.

Cruise lines were among the best-performing stocks. Norwegian Cruise Line Holdings jumped 8.4%, Royal Caribbean Group rose 7.6% and Carnival rose 5.3%.

By contrast, Advanced Auto Parts was the worst performer in the S&P 500, down 9.6%, after it missed earnings expectations and cut its full-year guidance.

In macro news for the day, new orders for capital goods in the US rose in July, albeit at a slower pace than in previous months.

Specifically, orders for capital goods, excluding aircraft, rose 0.4 percent in July, after rising 0.9 percent in June, according to government data. The average estimate of analysts in a Reuters poll was for a 0.3% increase in July.

Durable goods orders were unchanged in July from the previous month, defying analysts who had expected them to ease.

It is noted that in the rest of the week, the data on unemployment claims are expected on Thursday and the price index of personal consumption expenditures (PCE) on Friday. The Fed is closely monitoring the PCE report.