[New York Stock Market] No Powell Shock... Nasdaq Closes Up 0.94%

Powell Fed Chair Jackson Hole Speech
Closes Higher as Expected Content

The three major indices of the U.S. New York stock market all closed higher on the 25th (local time) as investors were relieved that Federal Reserve (Fed) Chair Jerome Powell's speech did not differ significantly from previous remarks.

[Image source=AFP Yonhap News]

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,346.90, up 247.48 points (0.73%) from the previous session. The large-cap S&P 500 index rose 29.40 points (0.67%) to 4,405.71, and the tech-heavy Nasdaq index ended the day at 13,590.65, up 126.67 points (0.94%).

All 11 sectors of the S&P 500 index advanced. Consumer discretionary and energy stocks rose more than 1%. Gap's stock price surged over 7% following news that its quarterly net profit exceeded expectations. Online payment company Affirm's shares jumped more than 28% as its earnings outperformed forecasts.

Hawaiian Electric, an electric utility company hit by the wildfires in Hawaii, saw its stock plunge over 18% after news that Maui County would file a lawsuit against the company. Despite reporting earnings that beat Wall Street expectations, Marvel Technology's stock slid more than 6%.

Chairman Powell delivered a speech at Jackson Hole, stating that inflation remains at a high level and that the Fed is prepared to raise interest rates further if necessary. He added, "We will maintain restrictive rates until we gain confidence that inflation is moving down toward our target."

As a result, stocks initially fell sharply amid concerns over additional Fed rate hikes. However, since Powell's hawkish stance had been somewhat anticipated and his remarks were largely consistent with previous statements, the market reversed course and moved higher.

Although stocks rebounded, concerns about a correction are growing as Nvidia's earnings failed to lift the indices the previous day. Nvidia's shares fell more than 2% on the day.

Michael Wilson, an analyst at Morgan Stanley, said in an interview that despite Nvidia's positive earnings, the stock's decline could indicate that this year's rally is losing momentum, advising that the possibility of further declines should be considered.

The 10-year Treasury yield rose during the day but fell back to near flat by the close, while the 2-year Treasury yield hit its highest level since 2006 before the gains diminished.

According to the Chicago Mercantile Exchange (CME) FedWatch, the probability of a rate hike in September in the federal funds rate (FFR) futures market was 19.5%, similar to the previous day. However, the combined probability of an additional 0.25 percentage point hike by November is 46.7%, and a 0.50 percentage point hike is 8.7%, totaling over 50%, whereas it was below 50% the day before.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) fell 1.52 points (8.84%) from the previous session to 15.68.