WASHINGTON (dpa-AFX) - After coming under pressure over the course of the previous session, stocks have shown a strong move back to the upside during trading on Friday. The major averages have all moved notably higher, with the Dow reaching its best intraday level in almost a month.
The major averages have pulled back well off their highs of the session in recent trading but remain firmly positive. The Dow is up 323.90 points or 0.8 percent at 41,036.68, the Nasdaq is up 164.50 points or 0.9 percent at 17,783.86 and the S&P 500 is up 41.56 points or 0.8 percent at 5,612.20.
The rebound on Wall Street comes as highly anticipated remarks by Federal Reserve Chair Jerome Powell have seemingly confirmed expectations that the central bank is prepared to begin lowering interest rates.
'The time has come for policy to adjust,' Powell said at the Jackson Hole Economic Symposium, although he noted the 'timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.'
Powell's determination that it is time for the Fed to begin cutting rates comes as his 'confidence has grown that inflation is on a sustainable path back to 2 percent.'
Fed officials have repeatedly said they need 'greater confidence' inflation is moving sustainably toward the central bank's 2 percent target before they would consider cutting rates.
Powell said inflation is now much closer to the Fed's objective, with consumer prices rising 2.5 percent year-over-year in July, and noted progress toward 2 percent has resumed after a pause earlier this year.
The remarks by Powell come as recent inflation data has increased confidence the Fed will cut interest rates at its next monetary policy meeting in September.
'Chair Powell just rang the bell to start rate cuts,' said MBA SVP and Chief Economist Mike Fratantoni. 'He was careful to note that incoming data will inform the pace of cuts, but a cut is coming in September, and this cut will be the first in a series that should bring the federal funds target down significantly over the next 18 months.'
According to CME Group's FedWatch Tool, there is a 65.5 percent chance of a quarter point rate cut at the September 17-18 meeting and a 34.5 percent chance of a half point rate cut.
The minutes of the Fed's late July meeting, released on Wednesday, revealed that the 'vast majority' of participants believed it would 'likely be appropriate' to lower rates at the next meeting if inflation data continued to come in 'about as expected.'
In U.S. economic news, a report released by the Commerce Department showed a substantial increase by new home sales in the U.S. in the month of July.
The Commerce Department said new home sales spiked by 10.6 percent to an annual rate of 739,000 in July after rising by 0.3 percent to an upwardly revised rate of 668,000 in June.
Economists had expected new home sales to jump by 2.1 percent to an annual rate of 630,000 from the 617,000 originally reported for the previous month.
With the much bigger than expected surge, new home sales reached their highest annual rate since hitting 741,000 in May 2023.
Sector News
Housing stocks are turning in some of the market's best performances on the day, with the Philadelphia Housing Sector Index surging by 2.8 percent.
The rally by housing stocks reflects optimism about lower interest rates and a positive reaction to the spike by new home sales.
Substantial strength is also visible among airline stocks, as reflected by the 2.8 percent jump by the NYSE Arca Airline Index.
Interest rate-sensitive telecom stocks are also seeing significant strength, driving the NYSE Arca North American Telecom Index up by 2.6 percent.
Oil service, banking and networking stocks have also shown strong moves to the upside amid broad based buying interest on Wall Street.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index climbed by 0.4 percent, while Hong Kong's Hang Seng Index dipped by 0.2 percent.
Meanwhile, the major European markets have all moved higher on the day. While the German DAX Index is up by 0.8 percent, the French CAC 40 Index is up by 0.7 percent and the U.K.'s FTSE 100 Index is up by 0.4 percent.
In the bond market, treasuries have moved back to the upside in response to Powell's speech. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.7 basis points at 3.805 percent.
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