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Stock Market News for Aug 30, 2021

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·5 min read
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Benchmarks closed higher on Friday with the S&P 500 and Nasdaq hitting fresh all-time highs after Federal Reserve Chair Jerome Powell assured that they might taper bond purchases this year, but interest rate hikes are still far away.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 242.68 points, or 0.7%, to close at 35,455.80. The blue-chip Dow was lifted by more than 2% gain in The Boeing Company BA and The Walt Disney Company DIS. Both the stocks hold a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 rose 39.37 points, or 0.9 %, to end the session at a record high of 4,509.37 on Friday. Nine of the 11 major sectors of the broader index closed in the green on Friday with the energy sector leading the rally closing 2.6% higher. The communication services, materials, and financials sectors closed at least 1.3% higher for the session.

The Nasdaq Composite Index closed at a record high of 15,129.50, after adding 183.69 points, or 1.2%. The index’s highest gainer was Workday, Inc. WDAY jumping 9.1%, after it reported second-quarter fiscal 2022 earnings of $1.23 per share, surpassing the Zacks Consensus Estimate of 78 cents on Thursday, after market close and subscription revenue that jumped 23% from a year-ago period. Among the top gainers were BioMarin Pharmaceutical Inc. BMRN and Lam Research Corporation LRCX that rose nearly 6% and 4.1% on Friday.

However, gains were capped by an 8.6% decline in the share of Peloton Interactive, Inc. PTON, after its poor fourth-quarter earnings results on Thursday and news that the Justice Department and U.S. Department of Homeland Security have subpoenaed the company for documents relating to its reporting of injuries caused by its products.

On Friday, the fear-gauge CBOE Volatility Index (VIX) decreased 13%, to close at 16.39. Advancing issues outnumbered declining ones for 5.21-to-1 ratio on the NYSE, while a 3.40-to-1 ratio on the Nasdaq favored advancers. The S&P 500 posted 60 new 52-week highs and one new low, while the Nasdaq Composite recorded 132 new highs and 37 new lows. A total of 8.67 billion shares were traded on the last trading session, lower than the last 20-session average of 8.95 billion.

Market’s Rally on Powell’s Jackson Hole Remark

On Friday, Federal Reserve Chair Jerome Powell remarked at the Jackson Hole central bankers’ symposium that the central bank will pull back some of its monetary stimulus this year. Fed will taper the purchases of $80 billion of Treasury and $40 billion of mortgage-backed securities each month, however, Powell did not signal specific timing. He also emphasized that the surging inflation is a short-lived phenomenon caused by supply chain bottlenecks and increased demand for products as the economy recovers from the pandemic.

As per Powell, inflation is around the central bank’s target rate of 2% and until there is “substantial further progress” it will not start tightening policy. Investors expect Fed to make an announcement on tapering at its policy meeting in September after collecting further evidence of the health of the economy which includes August’s jobs reports.

Economic Data Log

A series of economic data was released on Friday that are aligning the indexes on track to end the month higher.

The Bureau of Economic Analysis reported that core personal consumption expenditures (PCE) increased $42.2 billion or 0.3% in July, in line with the consensus estimate. The core rate that excluded food and energy prices, remained unchanged at 3.6% for the past 12 months, keeping it at a 30-year high. Meanwhile, June’s figure was upwardly revised to 0.5%. The reports also stated that real PCE decreased 0.1% and the PCE price index for July increased to 4.2% year to date, a fifth straight monthly increase. Real PCE is now at the highest level since 1991 and reflects an increase in both goods and services, with energy prices increasing 23.6% and food prices increasing 2.4%.

Per the same report, for the month of July personal income rose 1.1% ($225.9 billion), outpacing the consensus estimate of a 0.2% increase. June’s figure was also increased to 0.2%. However, personal spending edged up 0.3% last month, below the consensus estimate of 0.4% rise and much lower than June’s revised figure of 1.1%. Disposable Personal Income (DPI) increased 1.1% in July.

In a separate report, the University of Michigan stated that its consumer-sentiment index slipped to 70.3 for August, from 81.2 in June. The drop in consumer sentiment indicates dwindling consumer optimism amid rise and spread of the coronavirus delta variant.

Weekly Roundup

For the week ending Aug 27, the DOW, the S&P 500 and the Nasdaq closed 1%, 1.5% and 2.8% higher, respectively. The small-cap Russell 2000 index closed 5.1% higher for the week, and recorded its best weekly rise since Mar 12. A series of economic data and second-quarter corporate earnings reports kept investors busy and Powell’s remarks pushed indexes higher before markets closed for the week.

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Peloton Interactive, Inc. (PTON) : Free Stock Analysis Report
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