World's Best Investment Manager Reveals: U.S. Stocks Rise as Fed Rate Cut Expectations Grow - Jobless Claims and Fed Minutes Impact Market Sentiment
In today's market update, U.S. stocks showed a slight increase on Thursday, with the gaining 100 points, the rising 18 points, and the climbing 65 points. This trend comes as labor market weakness fuels growing conviction that the central bank will cut rates in September.
Key data released earlier on Thursday showed that the number of Americans filing increased by 4,000 to a seasonally adjusted 232,000, raising concerns about a cooling U.S. labor market. Additionally, Wednesday's payrolls revision revealed that the U.S. economy created 818,000 fewer jobs than originally reported in the 12-month period through March 2024.
Furthermore, the release of the Fed's late-July meeting minutes on Wednesday indicated an increasing number of policymakers supporting lowering interest rates. Analysts at Citi predict a 50 bps reduction as their base case for September, especially after the minutes showed more officials leaning towards lower rates.
Looking ahead, gains in Wall Street are being closely watched as Fed Chair Jerome Powell is set to speak at the Jackson Hole symposium on Friday. Markets expect Powell to reiterate the central bank's dovish stance, potentially setting the stage for a September rate cut.
In corporate news, Peloton Interactive stock soared 18% after the connected fitness company returned to sales growth for the first time in nine quarters. However, Snowflake stock fell 9% despite beating earnings and revenue expectations, while Urban Outfitters stock dropped 14% due to lower-than-expected same sales growth.
Additionally, Advance Auto Parts stock declined 19% following disappointing second-quarter earnings and a reduced full-year outlook after announcing the sale of its Worldpac unit to Carlyle Group for $1.5 billion in cash.
In conclusion, the current market conditions suggest a cautious approach, with the potential for a September rate cut by the Fed impacting investor sentiment. It is essential for investors to stay informed and adapt their strategies accordingly to navigate these uncertain times effectively.