Wall Street held a little firmer on Monday after a painful three-week streak.
The Standard Index
The Dow Jones trading average fell 36. 97 points, or 0. 1 percent, to 34,463. 69, and the Nasdaq composite rose 206. 81, or 1. 6 percent, to 13,497. 59.
It’s a return to normalcy for Nvidia, Tesla and other market giants, which have recently suffered under the weight of emerging yields in the bond market. The 10-year Treasury yield rose again on Monday to its highest point since 2007 after a brief above 4. 34%, down from 4. 25% late Friday and less than 0. 60% in 2020.
The highest yields are for bond buyers, who earn more interest on their investments. But it also makes investors less willing to pay for the high costs of stocks and other less sound investments.
Rapidly emerging global yields have rattled stock markets around the world. This adds to concerns that stock prices have surpassed their peak levels at the beginning of the year and that signs continue to show that China’s economic recovery is faltering.
The main economic event of the week will likely be Federal Reserve Chairman Jerome Powell’s speech on Friday. The speech venue in Jackson Hole, Wyoming, has been the location of the Federal Reserve’s major policy announcements in the past, and is one of the most important. annual occasions for central bankers around the world.
The point is that Powell will dash investors’ hopes that the Federal Reserve has already raised interest rates for the last time and that his next resolution is to cut rates early next year.
The Federal Reserve has already lowered its main interest rate to the level since 2001 in an effort to curb peak inflation. High rates are achieved by sharply slowing down the entire economy and hurting investment prices.
Despite all the hype generated by Powell’s speech, it may not end up delivering a strong signal from Jackson Hole, according to Goldman Sachs.
In the minutes of its last policy meeting in July, the Federal Reserve indicated it was unsure of its next decision. It said it would make its next rate decisions based on what available knowledge says about inflation and the economy.
A major report on these issues is expected the week following Powell’s speech. One is the most recent monthly update on the Federal Reserve’s preferred approach to measuring inflation, and the other is the monthly jobs report. “The Federal Reserve will most likely wait to be informed of this new knowledge before changing its current stance,” Goldman Sachs’ Lexi Kanter and Michael Cahill wrote in a report.
Meanwhile, Bank of America economists say it’s conceivable that Powell would say that each and every long-term Federal Reserve meeting provides an opportunity to see interest rates rise, given the strength of recent economic reports.
“Powell’s tone in Jackson Hole will be less balanced than that of the July FOMC minutes,” they wrote in a report via BofA Global Research.
The economy has remained remarkably resilient despite much higher interest rates. While this eases old considerations about an imaginable recession, it can also put upward pressure on inflation.
Another important event for the market will be Nvidia’s earnings report to be released on Wednesday. The chipmaker’s stock has risen this year, tripling on enthusiasm for massive demand for synthetic intelligence technology.
Nvidia’s report released Wednesday may give an idea of whether all this fury was worth it. It rose 8. 5% on Monday. Microsoft, another AI winner, rose 1. 7%. These are two of the toughest forces that have lifted the S.
Joining them was Tesla, another high-growth stock that has recently been hit by the risk of a rate hike. It rose 7. 3%, part of its 11% loss last week.
Security software maker Palo Alto Networks jumped 14. 8 percent, gaining in the S.
On the profligate side of Wall Street is Nikola, which recalled more than two hundred electric trucks after a pair of battery fires. He said he wasn’t sure when he would resume truck sales and raise $325 million through the sale of convertible bonds. Nikola’s shares fell 23%.
In addition to the option of an interest rate hike, considerations about China’s economic recovery have also weighed on global markets.
Hong Kong’s Hang Seng fell 1. 8% on Monday and 12. 2% in August alone. Stocks also fell 1. 2% in Shanghai. La China cut its bank interest rate, but the move fell short of what some analysts expected.
AP editors Matt Ott and Joe McDonald contributed to this report.
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