Friday saw the market react positively to Fed Chair Jerome Powell’s dovish sounding comments at the Jackson Hole Economic Symposium. Mr. Powell all but confirmed that a rate cut is coming in September, acknowledging that “the time has come for policy to adjust.” The chairman also noted that “downside risks to employment have increased,” but the investors had already digested the recent employment data and weren’t bothered by Powell’s comment. Specifically, the market had brushed off the release of revisions to nonfarm payrolls for the April 2023-March 2024 period, which showed that there were 818,000 fewer nonfarm payroll positions than previously thought, creating some concern that the labor market has been softening for a longer period than previously thought.
Ultimately, the S&P 500 ended the week 1.5% higher, the Nasdaq gained 1.4%, and the Russell 2000 jumped 3.6%. The week left the S&P 500 just 0.6% below its all-time high. Volume was below-average through most of the week, reflecting a lack of participation due to vacation schedules and some hesitation ahead of potentially influential events.
Many stocks participated in what was a broad advance in the market. The equal-weighted S&P 500 jumped 2.1% and ten of the 11 S&P 500 sectors registered gains. The lone sector to log a decline was energy (-0.5%) while the rate-sensitive real estate sector (+3.6%) registered the biggest gain. Other top performing sectors included the materials (+2.4%), consumer discretionary (+2.1%), and industrial (+1.8%) sectors. The 10-yr note yield dropped eight basis points this week to 3.81% and the 2-yr note yield settled 16 basis points lower at 3.91%.