Tech megacaps outpaced the broader stock market, with traders awaiting Jerome Powell’s speech on Friday for clues on how hawkish the Federal Reserve will be in the face of mounting economic challenges.
(Bloomberg) — Tech megacaps outpaced the broader stock market, with traders awaiting Jerome Powell’s speech on Friday for clues on how hawkish the Federal Reserve will be in the face of mounting economic challenges.
The S&P 500 pushed higher after fluctuating earlier in the day, while the NYSE FANG+ Index of giants like Amazon.com Inc.
and Tesla Inc. rallied over 1.5%. Elon Musk’s electric-vehicle maker will start trading on a split-adjusted basis on Aug. 25. Hedge funds ramped up bets on US big tech and whittled down overall holdings to focus on favored names last quarter, with conviction climbing back to levels seen at the start of the pandemic, according to Goldman Sachs Group Inc.
Treasury 10-year yields traded above 3%, while the dollar was little changed.
There’s been no shortage of hawkish Fedspeak in the weeks leading up to the prestigious Jackson Hole, Wyoming annual event that will be attended by policy makers from around the world.
The latest such remarks came from Fed Bank of Minneapolis President Neel Kashkari, who said Tuesday that it’s “very clear” that officials need to tighten policy to bring inflation back under control.
“We don’t expect any shock-and-awe, Volcker-style, hyper-aggressive articulation by Powell or anyone else for that matter,” said Troy Gayeski, chief market strategist at FS Investments.
“However, it’s very clear that the rally since the June bottom works directly against what the Fed has been trying to achieve, which is tighter financial conditions to slow economic growth and slow inflation.
So they have to push back and they’ve been doing that clearly.”
Economic reports have been mixed at best, underlining the delicate task policy makers face in bringing down high inflation without sparking a recession.
Data Wednesday showed US pending home sales fell to the lowest since the start of the pandemic. While orders placed with US factories for core capital goods beat forecasts, the picture might change in the coming months amid higher borrowing costs and uncertainty about the growth outlook.
In corporate news, Peloton Interactive Inc.
soared after saying it will sell bikes and certain accessories on Amazon.com Inc. in the US. Bed Bath & Beyond Inc. jumped after a report said that the home goods retailer has selected a lender to provide financing as it seeks to boost liquidity.
Read: Sell Side Vindicated as Price Targets Reap Alpha: Taking Stock
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What to watch this week:
- US GDP, initial jobless claims, Thursday
- Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
- ECB’s July minutes, Thursday
- Fed Chair Powell speaks at Jackson Hole, Friday
- US personal income, PCE deflator, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.5% as of 11:30 a.m.
New York time
- The Nasdaq 100 rose 0.7%
- The Dow Jones Industrial Average rose 0.4%
- The Stoxx Europe 600 rose 0.2%
- The MSCI World index rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was unchanged at $0.9970
- The British pound fell 0.3% to $1.1801
- The Japanese yen was little changed at 136.88 per dollar
Bonds
- The yield on 10-year Treasuries advanced five basis points to 3.09%
- Germany’s 10-year yield advanced four basis points to 1.36%
- Britain’s 10-year yield advanced 11 basis points to 2.69%
Commodities
- West Texas Intermediate crude fell 0.5% to $93.23 a barrel
- Gold futures rose 0.3% to $1,766.10 an ounce
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