Wall Street ended the trading day on a positive note, as investors found their footing after Fed Chair Jerome Powell said the central bank is "prepared to raise rates further" at the annual Jackson Hole Economic Symposium in Wyoming.
Investors digested Powell's comments in halting phases, at one point dragging all the major averages into the red. But the market settled on a balanced reading of the speech. While the Fed chief acknowledged inflation has come down from its peak, he reiterated that prices remain "too high," leaving the door open for the central bank to continue tightening. In what some analysts have dubbed a Rorschach test, Powell's remarks inspired both hawkish and dovish predictions of what comes next. Wall Street appears to have taken a slightly optimistic middle road.
The S&P 500 (^GSPC) edged up by about 0.7%, while the Dow Jones Industrial Average (^DJI) rose 0.7%, or more than 200 points. The tech-heavy Nasdaq Composite (^IXIC) climbed just under 1%, as the major averages won the day after Powell delivered a cautious message on the fight to bring inflation back to its 2% target.
The turn on Wall Street comes after Thursday's retreat when stocks finished lower across the board as the Nasdaq fell nearly 2%, forfeiting gains from an early rally spurred by Nvidia's (NVDA) strong earnings report.
Powell's remarks reinforced prior comments by Boston Fed President Susan Collins — who spoke to Yahoo Finance's Jennifer Schonberger in an interview from Jackson Hole — suggesting higher interest rates may be needed to tame inflation.
Last year, stocks sold off sharply during Powell's speech in Jackson Hole, when he said the Fed would continue raising interest rates "until the job is done." Since that speech, interest rates have risen an additional 300 basis points with the fed funds rate now at its highest level since 2001.
As Powell signaled the possibility of additional rate hikes, the bond market sent yields higher, with the yield on the two-year Treasury rising to 5.069%.
Wall Street wrapped the trading day with a win Friday, after Fed Chair Jerome Powell left the door open to more rate increases, but reiterated the central bank’s data-driven approach. Investors settled on a slightly optimistic reading of Powells’s remarks but not before sending stocks on a roller coaster ride as dueling interpretations spun the market in different directions.
The S&P 500 (^GSPC) edged up by about 0.7%, while the Dow Jones Industrial Average (^DJI) rose 0.7%, or more than 200 points. The tech-heavy Nasdaq Composite (^IXIC) climbed just under 1%.
Costs for preschool and day care are still climbing in the US, bucking the national trend of cooling prices, and squeezing parents already in the grips of inflation.
The average price for daycare and preschool across the country increased 6% in July compared to a year ago, according to the latest data from the Bureau of Labor Statistics. On top of this, headline inflation showed prices rose 3.2% over the prior year in July and 3% in June, the least in two years.
But a double crunch of staff shortages and an end to pandemic funding is set to ratchet up the affordability challenges facing parents.
In 2021, Congress passed the American Rescue Plan Act, which included $24 billion in grants to help stabilize the childcare industry and about $15 billion to help families afford care. But those funds are set to expire at the end of September, and a bitterly divided Washington is unlikely to grant additional financial relief.
Researchers point to more parents returning to in-office work, the diminished pool of childcare workers, and higher wages as factors that could continue to increase costs.
“Huge costs are being shouldered by families,” said Brad Wilson, CEO of Care.com, a marketplace for families to find help caring for children, seniors, and pets. “The headline here is that childcare is a systemic issue — one that isn’t new but is getting worse,” he said. “Without it, parents can’t work.”
Disney (DIS) stock rose just under 1% on Friday, stabilizing after shares reached a nine-year low on Thursday during what’s been a challenging year for Disney investors.
The stock closed Thursday’s trading session at $82.47 a share; Disney shares had not closed below $84 since Oct. 17, 2014, when the stock finished that day at $82.68.
Shares have also underperformed the benchmark S&P 500, declining nearly 5% year to date compared to the S&P’s roughly 15% gain. Over the last six months, Disney shares have fallen 17% against a 9% gain for the S&P 500.
Disney has faced a slew of recent challenges that have dampened investor sentiment. The company’s parks business is slowing. Its linear TV division is declining, and so are subscribers to its flagship streaming service Disney+. Not to mention the media giant seems to have lagged competitors at the box office.
Some on Wall Street are advocating for a breakup, suggesting Disney should consider unloading unprofitable or “non-core” assets.
A new report from The Information late Thursday said the company is in early talks with Amazon (AMZN) to help bring ESPN fully over the top as a direct-to-consumer streaming platform.
The tech behemoth could offer ESPN through one of its streaming services, which would help boost its distribution, the report said. It’s also possible Amazon could take a minority stake in the sports network.
ESPN declined to comment on the report, while Disney and Amazon did not immediately respond to Yahoo Finance’s request.
Read more here.
Crypto owners struggling to prepare their taxes may see some relief.
The US Treasury Department and the IRS on Friday unveiled a new proposal that would require crypto brokers to send customers a standard tax form every year, to ease the burden on taxpayers come filing season. The agencies said the proposed rule is part of an effort to “crack down on tax cheats,” and “address the tax evasion risks posed by digital assets, and help ensure that everyone plays by the same set of rules.”
The proposal arrives as the industry faces an array of legal and regulatory challenges.
The new regulations are designed to ease the burden on taxpayers who may find it difficult or costly to calculate their crypto gains, the agencies said. Under current rules, taxpayers who own crypto assets may be entitled to deduct losses when they sell their tokens. But crypto holders have to make complicated calculations or pay for tax preparation services to find out if they owe taxes. The proposal would require brokers to give users a new form, dubbed a 1099-DA, to help people prepare there taxes. Under this new regime, brokers would be subject to the same information reporting rules as brokers who offer customers stocks and other financial instruments, the Treasury Department said.
The first year that brokers would be required to report any information on sales and exchanges of digital assets is in 2026, for transactions that took place in the prior year. As part of the public commenting period, Treasury and the IRS welcome comments and feedback from taxpayers, market players and other interested parties, with the comment period ending at the end of October. Two public hearings are scheduled on Nov. 7 and 8.
Since the beginning of 2023, the Securities and Exchange Commission has charged 17 different crypto actors with violating securities laws, including several exchanges that allow investors to trade digital currencies as well as individual issuers of digital tokens.
Here are some of the stocks leading Yahoo Finance’s trending tickers page in afternoon trading on Friday:
Affirm (AFRM): Shares of the payments company surged more than 30% Friday afternoon as its fourth-quarter revenue results beat analysts’ estimates.
Meta (META): Facebook’s parent company sank almost 3% coinciding with the deadline for users to opt in to a payout from the $725 million class action settlement related to the Cambridge Analytica data scandal.
Disney (DIS): The House of Mouse rose 0.61% on Friday after recording its lowest close since 2014, as the entertainment giant’s turnaround continues to draw skepticism on Wall Street.
Hawaiian Electric (HE): The island’s largest utility continued its plunge, dropping 16% after local authorities filed suit against the company accusing it of negligence by failing to shut down power lines, leading to the deadly wildfires.
Marvell Technology’s (MRVL): Shares of the chipmaker lost 7% Friday morning following second quarter results that were slightly better than anticipated, but still showed a revenue decline of 12% compared to last year. The decline also coincided with a blowout quarter from Nvidia.
Digital World Acquisition Corp. (DWAC): DWAC, the group which has agreed to merge with Donald Trump’s media company saw shares gain 6% after the former US president returned to X, formerly known as Twitter.
During a speech on Friday, Fed Chair Jerome Powell addressed the string of more resilient than expected economic data investors have been digesting all summer long.
“We are attentive to signs that the economy may not be cooling as expected,” Federal Reserve chair Jerome Powell said Friday at Jackson Hole Economic Symposium in Jackson, Wyo.
He added: “Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy.”
The comments come as signs of a resilient US economy have been abundant. July’s retail sales report revealed the control group, which contributes directly to Gross Domestic Product (GDP), rose 1.0%. Economists surveyed by Bloomberg had expected just a 0.5% increase for the control group. The July labor report showed wages increased at 4.4% rate compared to the year prior and the unemployment rate remains historically low, while overall job additions showed signs of cooling.
The strong data had economists and even the Fed’s own staff call off their 2023 recession calls while also spurring conversations of a “soft landing” conclusion to the Fed’s hiking cycle, where inflation stabilizes without economic growth taking a significant downturn. But Chair Powell warned the path forward might not be so obvious.
“Evidence that the tightness in the labor market is no longer easing could also call for a monetary policy response,” Powell said.
These call outs were key to how investors will dissect Powell’s speech, according to EY Chief Economist Gregory Daco.
“By highlighting these [upside] risks, and noting that policymakers would proceed “carefully”, Powell maintained maximum policy optionality for upcoming meetings,” Daco wrote in a note on Friday.
Here are some of the stocks leading Yahoo Finance’s trending tickers page in morning trading on Friday:
Marvell Technology’s (MRVL): Shares of the chipmaker lost roughly 8% Friday morning following second quarter results that were slightly better than anticipated, but still showed a revenue decline of 12% compared to last year. The decline also coincided with a blowout quarter from Nvidia.
Hawaiian Electric (HE): The island’s largest utility continued its plunge, dropping 16% after local authorities filed suit against the company accusing it of negligence by failing to shut down power lines, leading to the deadly wildfires.
Disney (DIS): The House of Mouse rose 0.56% on Friday after recording its lowest close since 2014, as the entertainment giant’s turnaround continues to draw skepticism on Wall Street.
Digital World Acquisition Corp. (DWAC): DWAC, the group which has agreed to merge with Donald Trump’s media company saw shares gain 0.65% after the former US president returned to X, formerly known as Twitter.
Nordstrom (JWN): The retailer’s share price almost 10% Friday, reversing gains seen late Thursday, after the company offered a cautious outlook for the back half of 2023.
Stocks were whipping around in morning trade on Friday as investors worked to find a clear direction following Fed Chair Jay Powell’s speech in Jackson Hole.
With the Fed chair unequivocal in his view the Fed will work to bring inflation back to its 2% target, stocks initially fell as Powell’s remarks were released.
A rally soon ensued, with the Nasdaq rising as much as 1%. At least one Wall Street expert in our inbox pointed to Powell’s comment which said, “Given how far we have come, at upcoming meetings we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks.”
“Proceed carefully” being a sign for investors an easier Fed could be coming into view.
By 10:45 a.m. ET, however, stocks had moved into red figures with the Nasdaq down 0.3%, the S&P 500 off 0.2%, and the Dow down 0.1%.
Powell’s outline for the Fed’s next moves, however softened on the margins, only really opened two possibilities for interest rates in the near term: unchanged or higher.
Fed Chair Jay Powell’s highly-anticipated speech from Jackson Hole on Friday was largely a reiteration of the message he’s been trying to get across for months — the Fed will not quit in its fight to bring inflation back to 2%.
The key pull from Powell’s speech is right at the top (emphasis ours):
“At last year’s Jackson Hole symposium, I delivered a brief, direct message. My remarks this year will be a bit longer, but the message is the same: It is the Fed’s job to bring inflation down to our 2 percent goal, and we will do so. We have tightened policy significantly over the past year. Although inflation has moved down from its peak—a welcome development—it remains too high. We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
Elsewhere in Powell’s speech, a strong economy, strong labor market, and some notable dynamics in the economy that could help ease inflation pressures get some play.
Following Powell’s comments, stocks were higher.
Overall, an important examination of the economy from the Fed chair we think is worth an investor’s time to read in full.
Wall Street rang in the day on a high note in anticipation of Fed Chair Jay Powell’s remarks at the annual Jackson Hole Economic Symposium in Wyoming, which is scheduled to begin less than an hour after the opening bell. The market already recoiled Thursday when Boston Fed president Susan Collins suggested higher interest rates may be needed to tame inflation, during an interview with Yahoo Finance. Market watchers will be looking for more clarity from Powell and insight on the direction of the Fed’s interest rate policy.
The S&P 500 (^GSPC) edged higher by 0.4%, while the Dow Jones Industrial Average (^DJI) increased 0.4%. The tech-heavy Nasdaq Composite (^IXIC) advanced 0.5%, setting the major averages up for a win after Thursday’s tumble.
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