Friends
This morning, in his speech at Jackson Hole, Fed Chair Powell made it pretty clear that the Fed will indeed begin to lower rates in September. Again, the bond market has been pricing several rate cuts in already so movement in the bond market has been more muted this week. But stocks continue to push higher. Will lower rates move investors out of money market accounts and short-term fixed income instruments into the stock market? Maybe this has already been happening given the rally we have seen in the past couple of weeks.
Anyway, as for today, by the close the Dow Jones Industrial Average was up 462 points to finish the day at 41,175. The S&P 500 was up 63 points to close at 5,634. The Nasdaq Composite Index was up 258 points to close at 17,877. Gold was up $30 to trade at $2,546 per ounce, while oil was up $1.91 to trade at $74.92 per barrel WTI.
Now market participants await the September FOMC meeting. Will the Fed cut the Fed Funds rate a quarter of a percentage point or will they go with a half of a point cut? Again, the Fed Funds rate sits at 5.25%-5.50% at the moment, but the 2-year Treasury note is yielding less than 4%. It would seem pretty likely that unless there is an unexpected spike in inflation in the coming months that the Fed Funds rate will sit closer to 4% by year end than where it is now. Of course, time will tell. Stay tuned.
Have a great weekend everyone.
