4:05pm: Stocks soar
Wall Street finished the week on a high after Fed chair Powell opened the door to a September rate cut with his remarks at Jackson Hole.
The Dow Jones added 1.9% at 45,631 points, a new record high for the index. The Nasdaq also finished the day 1.9% higher at 21,496 points while the S&P 500 was up 1.5% at 6,466.
2:48pm: Market movers
- Intuit delivered better-than-expected results for the fiscal fourth quarter, but shares of the company fell more than 6% in early trade as revenue guidance fell short of estimates.
- Zoom Video Communications stock gained after the video conferencing platform’s second quarter earnings impressed and it raised its full-year outlook.
- Cracker Barrel Old Country Store's effort to modernize its image prompted a sharp market reaction and political backlash this week.
- Argo Blockchain shares fell 13% after the struggling crypto miner warned that talks over its proposed recapitalization plan remain incomplete, leaving its future uncertain.
1:26pm: September cut projected
Deutsche Bank analysts noted that Powell’s speech was more dovish than they had expected. As a result, they see a 25 basis point cut in September as most likely, followed by 25 basis point reductions in December and March.
The highlighted two key points, the first that Powell expressed growing concern about the labor market, noting slower job growth and rising downside risks, which could prompt rapid increases in layoffs and unemployment.
Second, he suggested that the current restrictive policy stance, combined with shifting risks, might justify adjusting policy soon, without tying this to specific upcoming data.
“This showed increased concern around the labor market picture that could potentially warrant a policy response,” the analyst wrote.
Chris Beauchamp, IG chief market analyst, wrote that for once, the Fed chairman may have pleased the White House by signalling a September rate cut is more likely.
“Stocks have surged in the wake of his speech, with the S&P 500 clawing back almost all the losses this week and indices in both the US and Europe firmly in positive territory,” he said.
“Worries about higher inflation have been cast aside for now, as investors look forward to the US economy powering ahead in the autumn.”
11:58am: Canada extends olive branch
Canada has decided to drop many of its retaliatory tariffs on a broad list of US products that comply with the existing North American trade deal (USMCA), according to a Bloomberg report.
This move, expected to be announced by Prime Minister Mark Carney following a cabinet meeting, is aimed at lowering tensions with the White House and aligning more closely with US tariff measures.
The change means that many US-made consumer goods will no longer face a 25% tariff when entering Canada, provided they comply with the USMCA terms.
It affects roughly $21 billion worth of U.S. exports to Canada, including products such as oranges, peanuts, wine, spirits, beer, appliances, and motorcycles
The report stated that the government will likely maintain 25% import taxes on US steel and aluminium products and automobiles.
10:57am: Powell on tariff impact
Speaking at Jackson Hole, Powell said tariffs have begun to push goods prices higher, but noted that the impact was likely “a one-time shift in the price level” rather than the start of an enduring inflation problem.
Still, he acknowledged that the risks of both persistent inflation and a weakening labor market must now be weighed carefully.
The speech also marked the release of the Fed’s revised long-term policy framework, the product of its five-year review.
Among the changes, the central bank abandoned the 2020 “makeup” strategy of tolerating moderate overshoots of inflation, with Powell stating that “there was nothing intentional or moderate about the inflation that arrived a few months after we announced our 2020 changes.”
The Fed also shifted away from its “shortfalls” language on employment, clarifying that risks can emerge from both overly tight and overly weak labor markets.
10:05am: Powell signals rate cut
Stocks surged in early trade Friday as Fed chair Powell signaled the current economic outlook “may warrant” a change in the central bank’s monetary policy.
“The stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance,” Powell said in prepared remarks.
The Dow Jones led the gains, adding 1.4% at 45,397 points. The Nasdaq was up 1.3% at 21,380 points while the S&P 500 added 1.1% at 6,442 points.
8:am: Dow Jones set to lead gains ahead of Jackson Hole
US stocks are set to open higher on Friday as investors await US Federal Reserve chair Jerome Powell's speech at the Jackson Hole symposium, scheduled for 10am ET.
Ahead of the market open, Dow Jones futures were 0.3% firmer, while those for the S&P 500 were up 0.2% and Nasdaq futures gained 0.1%.
Stocks finished lower on Thursday with investors in wait-and-see mode ahead of the Jackson Hole gathering.
The S&P 500 fell 0.4% while the Dow Jones and Nasdaq both shed 0.3%.
Investors aside, US President Donald Trump is also likely to be keeping a close eye. Powell has resisted Trump’s pressure to slash interest rates or resign, keeping policy steady for months. Powell is expected to outline his economic outlook amid trade tensions and uncertainty. The Fed has left rates unchanged at five straight meetings, but traders now see a 73.5% chance of a September cut – the first in nine months.
“Investors had been expecting a rate cut from the Fed next month, so if Powell were to say anything suggesting rates might be kept on hold, it could see stocks come under greater pressure," said AJ Bell's Dan Coatsworth.
Coatsworth noted that US PMI data on Thursday pointed to robust conditions in the world’s largest economy, potentially reducing the chances of the Fed moving rates lower.
S&P Global’s flash survey showed business activity strengthening in August, with Manufacturing PMI jumping to 53.3 from 49.8, well above expectations, while Services PMI held firm at 55.4. The Composite PMI also rose to 55.4, beating forecasts.
Separately, the Conference Board’s Leading Index slipped 0.1% in July, in line with estimates, while existing home sales surprised to the upside at 4.01 million, up 2.0% from the prior month.