U.S. stock market closed, once more, at record highs on Friday, August 27, 2021.
Fed Chairman Jerome Powell’s comments during his 2021 Jackson Hole speech gave investors comfort that the withdrawal of stimulus would be gradual.
In his address, he said that it would be appropriate to begin tapering bond purchases by the end of the year.
He added that the economy has now met the test of “substantial further progress” toward the Fed’s inflation objective, while the labor market has also made “clear progress.”
The part of the speech that probably made the difference was that he said that the Fed would not be in a hurry to begin raising interest rates after it begins tapering bond buying program.
Furthermore, Powell also said that he will be carefully assessing incoming data, including the effects of the Delta variant and the risks involved.
Here are the closing levels on Friday: –
| Last | Change | %Change | |
| Dow Jones | 35,455.80 | +242.68 | +0.69% |
| S&P 500 | 4,509.37 | +39.37 | +0.88% |
| Nasdaq Comp | 15129.50 | +183.69 | +1.23% |
| US 10Y | 1.31 | ||
| VIX | 16.39 | -2.45% | – 13% |
Looking ahead, we have the jobs report to look forward to this coming Friday, September 3, 2021.
It will give the Fed more data on the labor market, and the threat posed by the Delta variant. The report is unlikely to be as good as the previous months. According to a median of economists’ forecasts polled by Bloomberg, 750,000 jobs were added in August.
That would be a lower number than June and July, but still above the average from earlier in the year.
Ahead of the jobs report, private payrolls data from the ADP Research Institute on Wednesday, September 1, 2021, could give an indication regarding the pace of hiring. The week will also bring data on pending home sales and manufacturing.
If the job numbers are strong, the Fed may discount the weaker personal spending growth and supply side worries, and stay on course with their projection.
You have to be impressed at how the markets have continued their path to bluer skies. But will the trend continue to hold? How much higher can we go?
At the moment it looks like nothing can stand in the way. At least, until the shoe drops…
Source: CBOE, Reuters, Bloomberg
This commentary was written by James Gomes
James has been in the finance industry for over 30 years and most recently worked for a large US bank for more than 20 years.
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