(CercleFinance.com) – It’s a rather unexpected end: buyers firmly took control on the eve of the weekend, despite a speech by Jerome Powell in Jackson Hole which seemed to close the door to a pivot of the Fed (the starts to fall in rates) before the spring of 2024, i.e. probably three quarters, whereas it was anticipated for June 2023 12 months ago.
Wall Street ended with substantial gains with +0.73% on the Dow Jones, +0.67% on the S&P 500 (i.e. +0.8% over the week) and +0.94% on the Nasdaq. . which posted -0.6% around 5:00 p.m. (a nice rise that enabled it to gain +2.5% over the week and to return to the +30% bar since January 1).
The stars of the day were Intel +2%, ZScaler +2.2%, Adobe +2.5%, Analog +2.6%, Lucid +2.7%, Tesla +3.7% and Intuit +4.1 %.
Note Nvidia’s relapse of -2.4%, which fell in the space of 48 hours from $505 to $460 on Friday evening.
It was apparently an ‘uneventful day’ in the US bond market as the benchmark ’10-year’ T-Bond ended perfectly unchanged at 4.232%.
However, it fell to around 4.285% after Jerome Powell’s speech and the 2-year, which stretched towards 5.06%, posted its worst level since June 2006.
But Wall Street doesn’t even seem to notice.
The boss of the Fed, however, showered in a few sentences the hopes of an easing of rates in the ‘foreseeable future’.
He did not bother with convoluted formulas to tell investors that there will be no monetary easing until inflation is close to 2% and stabilizes around this level.
Jerome Powell indicated that ‘inflation has slowed but remains too high: the problem is far from being completely resolved, it is not certain that the current drop in prices will last’.
‘The current underlying growth remains higher than the historical average, which could maintain inflationary ferments’: it will therefore be necessary to maintain restrictive monetary conditions over time and the Fed stands ready to raise rates if necessary.
In other words, a rate cut is not an option during the next Fed meetings and if a status quo achieves consensus in mid-September (at 80%), it is 50/50 as far as a new round is concerned. vis at the beginning of November (target 5.50/5.75%).
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