Wall Street Closes Higher After Powell’s Jackson Hole Speech

U.S. stocks ended the week on a positive note after Powell's remarks at the Jackson Hole symposium. He said that the Federal Reserve would "proceed carefully" on any further rate hikes while highlighting the robustness of the U.S. economy that could require further interest rate increases. Yet recent business surveys have cast uncertainty over economic vigor, even if U.S. jobless claims remained near historic lows.

The S&P 500 and the Nasdaq Composite finished the week in positive territory, up 0.82% and 2.26%, respectively while the Dow Jones Industrial Average edged down 0.45%. The three indexes are down for the month.

European stock indexes snapped their three-week losing streak with the MSCI EMU up 0.62% and the FTSE up 1.05% despite the weak PMI readings.

In Asia, Japan’s Nikkei gained 0.55%. The country’s annual core consumer inflation hit 3.1% in July, slowing from 3.3% in June, but remains stubbornly above the central bank's target. The BoJ argues that wage pressures have yet to build up enough to warrant a fresh tweak to the ultra-loose monetary stance. By contrast, the Shanghai Composite fell for the third straight week, down 2.17%, due to the rapid deterioration of China's growth outlook.

Big Tech rebounds in the wake of Nvidia   

The tech sector led the pack this week, with a gain of 2.57%, boosted by Nvidia stocks (+6.28%). The tech giant reported revenue for the second quarter ended July 30, 2023, of $13.51 billion, up 101% from a year ago and up 88% from the previous quarter. This was far above analyst expectations, and the result echoed across tech stocks. 

Overall, growth industries fared well. The consumer discretionary sector gained 1.13% for the week as Tesla stocks bounced back (+10.72%). Investors were buying the recent dip in the EV maker on the heels of buy recommendations from Wall Street analysts. Communication services were up 0.98% in the wake of Netflix (+2.84%) and Alphabet (+2.01%).

On the flip side, the energy sector slid again (-1.37%), weighed down by oil prices. WTI crude fell by 1.75% due to concerns over demand, influenced by an increase in U.S. gasoline stocks and lackluster global manufacturing data. This outweighed optimism around a larger-than-expected drop in U.S. crude inventories, down 6.1 million barrels in the week to Aug. 18 (source: Energy Information Administration).

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