At the start of the last trading week in August, there was a slight increase in the value of futures representing stocks. The futures tied to the Dow Jones Industrial Average went up by 83 points, approximately 0.2%. Similarly, S&P 500 futures saw a 0.2% rise, and Nasdaq-100 futures increased by 0.3%.
Following recent remarks made by Federal Reserve Chair Jerome Powell, the market had a positive session. On Friday, the Dow Jones Industrial Average gained 0.7%, although it ended the week with a 0.45% decrease. The S&P 500 also increased by around 0.7%, and the Nasdaq Composite went up by about 0.9%. These dual indicators experienced their first winning week in four.
During his speech at the annual central bank conference in Jackson Hole, Wyoming, on Friday, Powell highlighted signs of ongoing economic growth and strong consumer spending. Nonetheless, he mentioned the central bank’s careful approach to further rate hikes.
While acknowledging a decline in inflation from its peak, Powell stressed that inflation remains higher than desired. He stated that the central bank is ready to raise rates again if necessary and plans to maintain a restrictive policy stance until there is confidence that inflation is consistently moving toward the desired level.
Market Outlook and Analysis for the Week Ahead
As of Monday morning, traders had estimated an almost 20% chance of the Federal Reserve implementing another rate hike in the upcoming September meeting, according to the FedWatch tool by CME Group.
Brian Price, Head of Investment Management at Commonwealth Financial Network, commented, “The plan to maintain a cautious approach remains in place for this year until the Federal Reserve is confident that inflation is moving in the right direction.” He also added that the current market feeling suggests the possibility of another interest rate increase before the Federal Reserve takes a break.
Starting on Monday, the final trading week of August began, and major indices were heading towards ending the month with losses. The Dow and S&P had declined by 3.4% and 4%, respectively, since the beginning of the month, while the Nasdaq had suffered a loss of around 5.3%.
In the upcoming week, investors on Wall Street will closely analyze additional economic data, focusing on the Dallas Fed index for August. This evaluation comes ahead of the monthly jobs report scheduled for release on Friday. The findings from these evaluations could provide a clearer understanding of consumer well-being, the broader economic landscape, and the state of the U.S. labor market.
3M Stock Value Surged
3M’s stock experienced a nearly 6% increase in premarket trading after the news reported that the company had tentatively agreed to settle over 300,000 lawsuits linked to earplugs sold to the U.S. military. The reported settlement amount was over $5.5 billion.
Chinese Stocks Saw a Significant Increase in Value
During the night, Chinese stocks went up as the government implemented measures to enhance the stock market, which included halving the tax on stock trades. The Shanghai Composite index increased by 1.1%, marking the largest single-day gain since July 28, when it had risen by 1.8%.
European Stocks Started Positively
European stocks rose as trading began, signaling a positive start to the final trading week of August. Traders considered the possibility of higher interest rates from the Federal Reserve and looked ahead to the upcoming U.S. jobs data scheduled for later in the week.
Germany’s DAX 30 index went up by 98 points, equaling a 0.6% increase. Similarly, France’s CAC 40 index rose by 59 points, indicating an increase of 0.8%, while the Italian FTSE MIB index saw a gain of 217 points, or 0.8%. It’s worth noting that the markets in the United Kingdom were closed due to a public holiday. Investors continue to closely monitor the monetary policy direction from the United States.
In the previous week, Jerome Powell, the Chair of the Federal Reserve, spoke during the annual Jackson Hole symposium hosted by the Kansas City Fed. He mentioned that inflation remains high and that the central bank is prepared to implement more rate hikes if necessary. Regarding specific stocks, UBS shares in Europe saw a 1.7% increase.
Credit Suisse, which is now part of UBS following a government-backed takeover, reportedly posted a loss of 3.5 billion Swiss francs (around $4 billion) according to the Swiss Sunday.
Summary
August’s final trading week started with slight gains in stock futures. Dow Jones futures rose 83 points, S&P 500 futures up 0.2%, and Nasdaq-100 futures 0.3%. Fed Chair Powell’s comments influenced positive trading. Dow rose 0.7% on Friday but ended the week with a 0.45% dip.
