Market Update | August 18th - August 22nd

Indexes

The S&P 500 gained 0.34% this week, the NASDAQ lost 0.56%, and the Dow Jones Industrial Average rose 1.49%. That's the third consecutive positive week for the S&P500 and Dow, whereas the Nasdaq lost its 2 week streak. Stocks were relatively stagnant on Monday as investors awaited significant news later in the week. Tuesday and Wednesday both ended in the red as the tech sector saw a decline and a mixed retail report was released Wednesday. On Thursday, some parts of the July Federal Reserve meeting were released, in which it seemed most of the decision makers still believed it was too soon to cut interest rates. This reversed earlier optimism of a rate cut. However, on Friday, Jerome Powell (the head of the Federal Reserve) released a statement that reinstated confidence in a rate cut. This sent stocks upwards, and reversed most of the week's previous losses.

Bonds

The yield (annual payment received on a bond, expressed as a percentage) of the 10-year U.S. treasury note dropped 9 basis points (which means .09%) throughout the week as investors responded to the statements from the Federal Reserve mentioned above.

Commodities

Oil prices rose by 1.4% after last week's drop. Additionally, after falling significantly during the stock rally last week, gold prices were bumped up slightly this week as investors processed volatility from the Fed meeting.

Events

Rate Cut Expectations

As previously mentioned, the most significant event this week was Jerome Powell's speech that significantly raised expectations for a September rate cut. According to CME Group’s FedWatch tool, the consensus is that there's about an 83.1% probability that the Fed will cut its rate by a quarter-point

Canadian Tariffs

Canada removed many retaliatory tariffs it had put in place over the previous few months. However, its 25% tariffs on U.S. autos, steel, and aluminum will remain in place for now. Negotiations are ongoing.

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What's Next

Next week, we have many things to watch, with Friday bringing the most important reports:

• Monday: New Home Sales (U.S. Census Bureau)

• Tuesday: S&P/Case-Shiller 20-City Composite Home Price Index, Durable Goods Orders (U.S. Census Bureau)

• Wednesday: No major reports scheduled

• Thursday: Second-quarter GDP (second estimate, U.S. Bureau of Economic Analysis), Pending Home Sales (National Association of Realtors), Weekly Unemployment Claims (U.S. Department of Labor)

• Friday: Personal Consumption Expenditures (PCE) Price Index (U.S. Bureau of Economic Analysis), University of Michigan Index of Consumer Sentiment