4:12pm: September cut eyed
US stocks finished Friday’s session on the front foot after Fed chair Jerome Powell signaled the central bank will begin cutting interest rates next month.
The Nasdaq led the gains, adding 1.5% at 17,877 points. The S&P 500 was up 1.2% at 5,634 points and the Dow Jones added 1.2% or 462 points at 41,175 points.
2:20pm: Stocks on the move
CAVA Group shares jumped over 16% Friday after the restaurant group showcased growth potential following its strong second-quarter performance.
Same-store sales beat expectations by 700 basis points and adjusted EBITDA reaching $34.3 million, well above the consensus estimate of $29.2 million.
Analysts are bullish across the board. Jefferies raised its price target for the stock from $94 to $117, highlighting a "solid beat" on same-store sales (SSS) and adjusted EBITDA, driven by a 14.4% increase in SSS.
Elsewhere, Thor Explorations Ltd (TSX-V:THX, AIM:THX, OTC:THXPF) leapt 20% to a year’s high as it revealed bumper earnings for the half year to end June and a near wiping out of its debt.
The Nigeria-focused gold miner reported interim net profits of US$39.9 million, up 129%, adding debt for the group was now down to just US$2.7 million net.
For the full year ear, Thor expects to produce around 90,000 oz, lower than expected to due to a rock fall incident and subsequent safety checks, but added that all-in-costs for the year will also fall to between US$900-1,000 an oz.
12:45pm: Powell signals rate cuts are imminent
Stocks surged on Friday after Federal Reserve Chair Jerome Powell signaled that the time has come to start cutting interest rates, marking a potential shift in monetary policy.
Around noon, the S&P 500 rose 0.5%, the Dow Jones gained 0.6%, and the Nasdaq led with a 0.8% increase as investors responded positively to Powell's remarks at the Jackson Hole symposium, indicating the beginning of an easing cycle.
"Although Powell hesitated to offer specifics in terms of the pace of rate easing it was clear that he remained satisfied that disinflation is continuing towards the Fed's price stability target," Quincy Krosby, Chief Global Strategist, LPL Financial remarked.
"Moreover, he maintained that the labor market, while normalizing, the unemployment rate has risen due to broader labor market participation met by fewer job vacancies. Still, he underscored that the Fed stands ready to act should there be a marked deterioration in labor conditions.
"Powell made it clear that the higher for longer monetary policy has been successful towards helping to restore price stability, however he didn't comment on the path of rate cuts for the rest of 2024, affording the Fed a cushion in the event the disinflationary path stalls or there's an uptick in inflation."
11:15am: 'Balanced and frank' speech
Federal Reserve Chair Jerome Powell made a "balanced and frank speech" that took responsibility for initially referring to inflation as “transitory," said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.
"The market should be happy with this speech because it wasn’t hawkish in any way, gave the green light for 25 bps rate cuts, and left the door open for even larger cuts if that becomes necessary (e.g. in the event the economy or labor market softens materially)," Zaccarelli commented.
However, Zaccarelli noted that he remains cautious.
"We have been pleasantly surprised – as should anyone except the most vocal bears – that the economy has remained as resilient as it has and we hope for everyone’s sake that the labor market holds up and recession can be pushed off until 2025 or even later, but it is important at this time to take a balanced approach to investing and neither plan for an imminent recession, nor chase risk and get complacent just because the Fed will be lowering interest rates in less than a month."
10.25am: Fed chair Powell signals time for rate cuts
Federal Reserve chairman Jerome Powell has signalled base rates will be cut in the US during his speech at the Jackson Hole Symposium.
“The time has come for policy to adjust,” he said on Friday.
“The direction of travel is clear and the timing and pace of rate cuts will depend on incoming data.”
Markets had been anticipating the central bank would begin cutting rates from September, though the depth of these remains in the air.
US markets got a boost on the comments, with the Nasdaq jumping 1.4%, the S&P climbing 1% and the Dow Jones adding 0.8%.
9.45am: Wall Street opens higher
Wall Street enjoyed a positive start on Friday morning as eyes were firmly fixed on Federal Reserve chair Jerome Powell’s speech at Jackson Hole later in the day.
The Nasdaq ticked up 0.9% after the bell, while the S&P 500 and Dow Jones each climbed 0.6% respectively.
This came less than an hour before Powell was set to deliver his speech at Jackson Hole, with investors awaiting any clues on the timing and depth of base interest rate cuts in the US.
“The big question is to what extent Powell validates expectations for a September rate cut, and whether he offers any indication of how big any rate cut might be,” Deutsche Bank analysts said ahead of the speech.
“Our US economists’ view is that it will be difficult for Powell to pre-commit to a particular trajectory at Jackson Hole.
“But they do think his comments will imply that the Fed can begin dialling back the degree of restraint soon, opening the door to a rate cut next month.”
Powell is set to start speaking at 10am Eastern Time.
7.31am: Stocks seen higher
Wall Street looked on course for a bright start to the day on Friday, as markets awaited any information on base rate cuts in a speech by Federal Reserve chair Jerome Powell.
Futures had the Nasdaq up 0.8% ahead of the opening bell, while the S&P 500 and Dow Jones looked to add 0.5% and 0.4% respectively.
This comes after declines across the board on Thursday as traders braced for Powell’s key speech at the Jackson Hole Symposium.
Powell will speak at 10am Eastern Time, with the speech coming as anticipation for a string of base rate cuts by the central bank heats up.
Markets expect around 95 basis points of cuts over the remainder of the year starting in September, leaving the depth of the first reduction in question.
Given more positive economic data since poor job market figures earlier in the month, Powell is expected to allude towards a softer cut initially, though any commentary around this and the bank’s outlook on the US economy will be eagerly awaited... Read more