The Dow Jones Industrial Average closed at a record high on Friday after Federal Reserve Chair Jerome Powell suggested the central bank could start cutting rates as soon as next month.
The blue-chip index jumped 846.24 points, or 1.89%, to 45,631.74. The S&P 500 added 1.52% to 6,466.91, just shy of its own peak, while the NASDAQ Composite rose 1.88% to 21,496.53.
Tech heavyweights, including Nvidia (NASDAQ:NVDA), Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOGL), Tesla (NASDAQ:TSLA), and Amazon (NASDAQ:AMZN) led the advance following Powell’s remarks at the Fed’s annual Jackson Hole meeting.
In his address, Powell said “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” adding that “the balance of risks appear to be shifting” as the economy absorbs “sweeping changes” in tax, trade and immigration policies.
Traders raised bets on a September quarter-point rate cut, with the probability climbing to about 83% from 75% earlier in the week, CME’s FedWatch tool showed.
For the week, the Dow gained 1.5%, the S&P 500 was up 0.3%, and the Nasdaq slipped 0.6%.
Apart from the much-anticipated Nvidia earnings, investors this week will also scrutinize a series of U.S. economic reports that could shape expectations for Fed policy.
The July personal consumption expenditures (PCE) inflation reading will be the main focus, with markets widely expecting the Fed to begin lowering rates next month.
A firmer core PCE print would increase the likelihood that policymakers will also need weak August payroll data, due in early September, to support a rate cut. Additional indicators will offer a broader view of the economy’s health. Durable goods orders for July and the Conference Board’s August consumer confidence survey arrive Tuesday, while the government’s second estimate of second-quarter GDP and the latest weekly jobless claims are due Thursday.
HSBC economists expect second-quarter GDP growth to be revised to an annualized 3.2% from the initial 3.0% estimate. In a recent note, they said that consumer sentiment will “remain subdued” in August, while July durable goods orders are likely to show a contraction.
Tech stocks slide raises stakes for Nvidia earnings The bulk of investors’ attention this week will be on Nvidia’s imminent earnings report.
The tech sector S&P 500 Information Technology fell 1.6% last week after a strong run, weighing on major indexes. Losses eased Friday as a broad market rally followed remarks from Fed Chair Jerome Powell that signaled upcoming rate cuts.
A pullback in U.S. tech stocks has increased the focus on Nvidia’s results, seen as a key gauge for the AI-driven rally.
The chipmaker’s shares have surged more than 30% this year and over 1,400% since late 2022, making it the most prominent beneficiary of investor enthusiasm for artificial intelligence.
Its results arrive as the second-quarter earnings season winds down, with S&P 500 profits tracking a 12.9% gain from a year earlier—well above the 5.8% rise expected at the start of July, according to LSEG IBES.
