The Monday Market Minute
- Wall Street opens with fresh record highs for the Nasdaq and S&P 500, with investors eyeing August non-farm payroll data on Friday.
- Global stocks grind higher following a dovish take on Fed Chair Powell’s Jackson Hole speech in thin late-August volume trading.
- European stocks near record highs, while UK markets remain closed for the traditional summer “Bank Holiday”.
- Hurricane Ida slams Gulf coast, shuttering 94% of production capacity, but prices fall as traders eye OPEC meeting later this week.
- Benchmark 10-year notes hover at 1.305%, while the dollar index bumps modestly higher against a basket of its global peers.
U.S. stocks edged higher Monday, extending the 52nd record closing high of the year for the S&P 500, as investors reacted to a dovish speech from Federal Reserve Chairman Jerome Powell while heading into a muted week for earnings and economic data releases.
While Powell laid out the case for the slowing of the Fed’s $120 billion in monthly bond purchases during his keynote address to the Kansas City Fed’s annual Jackson Hole summit, he offered no firm time table and repeated the central bank’s view that the so-called ‘tapering process’ should not be linked to future rate hike plans, which aren’t likely to begin until early 2023.
He also suggested that while “significant further progress” has been met with respect to inflation, more job market gains would be needed in order to justify firing the starting gun on bond market purchases.
“To us, this points to tapering likely beginning in November or December, though the Fed retains the option to delay it further if economic data were to soften,” said Scott Ruesterholz, a portfolio manager at Insight Investment, which has over $1 Trillion in assets under management.
“Moreover, while recognizing that inflation has risen substantially, Powell detailed why the Fed expects this to prove transitory as supply chains gradually normalize and structural disinflationary forces reassert themselves,” he added.
The additional monetary stimulus, alongside a forecast for third quarter earnings to grow 30% from last year to a collective $414.2 billion, gave stocks another boost Monday, with Europe testing all-time highs and Asia recoding solid gains in Shanghai and Japan.
On Wall Street, the Dow Jones Industrial Average booked an early 15 point opening bell dip, while the broader S&P 500 gained 7 points to start the trading day with a fresh record high. The Nasdaq Composite bumped another 61 points into the green.
In terms of individual stocks, Moderna and Pfizer both traded lower following headline risk linked to the drugmakers’ coronavirus vaccines in Asia and the Pacific region.
Moderna slumped 3.75% to $367.90 after Japan suspended a total of 2.6 million of its vaccine doses after a second round of contaminants were discovered over the weekend, while Pfizer edged down 0.5% following a myocarditis fatality linked to its “comiranty” COVID vaccine in New Zealand.
On the other side, Affirm Holdings soared more than 42.2% to $96.56 each after the “buy now, pay later” payment network group inked a deal with Amazon .
Hill-Rom Holdings shares surged 8.3% to $143.93 a report that Baxter International is negotiating to purchase the medical-equipment maker for about $10 billion. Baxter was up 3.25% at $76.37 each shortly after the start of trading.
Oil was also on the move, although prices were sliding into the red despite data from the Bureau of Safety and Environmental Enforcement indicating that some 94% of Gulf oil production has been taken offline as a result of Hurricane Ida, which slammed the Louisiana coast Sunday with windspeeds of more than 150 miles per hour.
Reports of little damage to drilling and refining installations, as well as the likelihood that OPEC will agree to rollover its 400,000 barrel per day production increase when cartel leaders meet later this week in Vienna, added to the downside pressure.
WTI futures contracts for October delivery were marked 14 cents lower at $68.60 per barrel while Brent contracts for the same month edged 2 cents higher to $72.71 per barrel.
Friday’s August employment report will highlight a tepid week for both earnings and economic data releases, with investors already looking to the start of September trading — traditionally the worst month for stocks on Wall Street — with the S&P 500 holding a year-to-date gain of 20%.
Alongside Friday’s employment data, which could show the addition of more than 1 million new jobs last months, investors were also get updates on pending home sales today, consumer confidence Tuesday, manufacturing PMI data on Wednesday and weekly jobless claims the following day.
In other markets, the U.S. dollar index, which tracks the greenback against a basket of six global currencies, was little-changed at 92.693 while benchmark 10-year Treasury note yields eased to 1.305%.
This article was originally published by TheStreet.