Stock market today: Wall Street tacks on some more gains following its best week of the year
By Stan Choe, The Associated Press on August 19, 2024.
NEW YORK (AP) – Stocks closed higher, tacking on some more gains following Wall Street’s best week of the year. The S&P 500 rose 1% Monday, coming within 1.1% of the all-time high it reached last month. The Dow Jones Industrial Average rose 0.6%, and the Nasdaq composite added 1.4%. Treasury yields eased a bit ahead of a speech on Friday from Federal Reserve Chair Jerome Powell, which will likely be the highlight of the week. Almost everyone expects the Fed to cut rates at its next meeting in September, but Powell could give hints on how many cuts will come and how quickly. THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below. NEW YORK (AP) – U.S. stocks are ticking higher Monday as Wall Street’s roller coaster of a summer levels out a bit. The S&P 500 was 0.7% higher in afternoon trading, coming off its best week of the year. The Dow Jones Industrial Average was up 188 points, or 0.5%, as of 2:54 p.m. Eastern time, and the Nasdaq composite was 1% higher. Among the biggest movers in the mostly quiet market was chip company Advanced Micro Devices. It rose 3.9% after saying it would buy ZT Systems, a supplier in the cloud computing and artificial-intelligence industries, in a cash-and-stock deal valued at $4.9 billion. That helped offset a 3.7% drop for Guess? Inc., which said its chief financial officer is stepping down to pursue another opportunity. The apparel and accessories company said it’s begun a search for its next CFO and appointed an interim. Trading was quiet elsewhere, including in the bond market. Treasury yields were easing a bit ahead of what’s likely to be financial markets’ main event for the week: a speech on Friday by Federal Reserve Chair Jerome Powell. The setting for the speech in Jackson Hole, Wyoming, has been home to some big policy announcements by the Fed in the past. Expectations aren’t that high this time around, with nearly everyone already expecting the Fed will begin cutting interest rates next month. That would be the first such cut since the Fed began hiking rates drastically in early 2022, hoping to slow the economy by enough to stifle inflation but not so much that it causes a recession. With inflation slowing from its peak above 9% two summers ago, Fed officials have already hinted cuts to rates are coming. The biggest question is whether the economy just needs the Federal Reserve to remove the brakes or if it needs more acceleration and deeper cuts. A surprisingly weak report on hiring by U.S. employers last month raised worries the Fed has already kept interest rates too high for too long. Such worries combined with concerns that investors took the prices of Nvidia and other highly influential Big Tech stocks too high in their frenzy around artificial-intelligence technology, along with other factors, to send markets globally through a scary couple weeks. That included the worst day for Japan’s market since the Black Monday crash of 1987. But an ensuing assurance from the Bank of Japan on interest rates there has helped calm the market. Several recent reports on the U.S. economy have also come in stronger than expected, covering everything from inflation to sales at U.S. retailers, which bolstered optimism. This upcoming week doesn’t have as many economic reports on the schedule. A preliminary report on U.S. business activity day could be the highlight of the week, arriving on Thursday. More action will likely come from corporate earnings reports as the reporting season for the spring winds down. Most companies have turned in better profits for the latest quarter than analysts expected, as is usually the case. With more than 90% of companies in the S&P 500 having already turned in their reports, they’re on track to deliver growth of nearly 11% in earnings per share from a year earlier, according to FactSet. That would be the best growth since the end of 2021 Retailers dominate the tail end of earnings season, and Lowe’s, Ross Stores, Target and TJX will be among those in the spotlight this week. A report on Friday suggested U.S consumers are feeling better about the economy than expected, but worries have been high about how much they can continue spending. Those at the lower end of the income spectrum appear to be under particular pressure, with prices still high across the economy despite inflation’s slowdown. In their commentaries accompanying their earnings reports, CEOs broadly seem to be remaining “in a wait and see loop” amid lingering worries, but there also seems to be confidence in “a pickup when greater macroeconomic and political clarity emerge,” according to Deutsche Bank strategists led by Parag Thatte. In the bond market, the yield on the 10-year Treasury dipped to 3.86% from 3.88% late Friday. In stock markets abroad, Japan’s Nikkei 225 dropped 1.8%. It was hurt by a rise in the Japanese yen’s value against the U.S. dollar. Such moves can erode profits for Japanese exporters, and big swings in the yen’s value following a recent hike to interest rates by the Bank of Japan was a big factor in markets’ turmoil earlier this month. It forced hedge funds around the world to abandon a popular trade en masse, where they had borrowed Japanese yen at cheap rates to invest elsewhere. On Monday, though, movements in other stock markets outside Tokyo were calmer, with European indexes modestly higher and Asian indexes mixed. 22-21
