The three major indices of the U.S. New York stock market closed higher on the 28th (local time), boosted by the remarks of Jerome Powell, Chairman of the Federal Reserve (Fed), at the Jackson Hole meeting held from the 24th to the 26th.
![[New York Stock Market] Rise on Jackson Hole Powell Speech Effect... Nasdaq Up 0.84%](https://cphoto.asiae.co.kr/listimglink/1/2023081312351738823_1691897717.jpg)
On that day in the New York stock market, the Dow Jones Industrial Average rose 213.08 points (0.62%) from the previous session to close at 34,559.98. The S&P 500, which focuses on large-cap stocks, increased by 27.6 points (0.63%) to 4,433.31, and the tech-heavy Nasdaq rose 114.48 points (0.84%) to close at 13,705.13.
Among the 11 sectors of the S&P 500, 10 closed higher, showing broad-based gains. The strength in technology stocks was also notable. Meta jumped 1.67%, while Apple and Nvidia rose 0.88% and 1.68%, respectively. Tesla’s gain was limited to 0.1%. 3M surged more than 5% following a Bloomberg report that it is prepared to resolve lawsuits related to earplug defects.
The stock market’s rise that day was interpreted as the "Powell effect." In his speech at the annual economic symposium held in Jackson Hole on the 25th, Chairman Powell said, "It is welcome progress that inflation has come down from its peak, but it remains too high," and added, "We are prepared to raise interest rates further if appropriate." However, he also stated that monetary policy would be implemented "cautiously" while monitoring future indicators. The market initially fell focusing on further rate hikes but then paid attention to his remarks about proceeding cautiously with rate increases. Thanks to this Powell effect, the New York stock market closed higher across the board on Monday.
According to the CME FedWatch tool, on the morning of that day, the federal funds futures market estimated a 21.5% chance that the Fed would raise the benchmark interest rate to 5.5?5.75% in September. This is up from 14% a week ago, but the market is focusing on the fact that uncertainty has been reduced.
In the New York bond market that day, the benchmark 10-year U.S. Treasury yield traded at 4.21%, down from 4.239% on the 26th.
The direction of the New York stock market depends on the employment and inflation data to be released this week. On the 31st, the Fed’s closely watched Personal Consumption Expenditures (PCE) price index will be announced, followed by the nonfarm payroll employment data on the 1st of next month. The Wall Street Journal (WSJ) noted that the stock market’s rise indicates that investors are increasingly betting that the domestic economy will continue to thrive despite high interest rates, and that many are currently adopting an optimistic outlook.
Jiwei Ren, portfolio manager at Penn Mutual Asset Management, predicted, "A soft landing is now the consensus."
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