Weekly Market Commentary August 19th to August 23rd 2024

The symposium at Jackson Hole was highly anticipated, as it is often a venue where central bankers signal major policy initiatives. In Federal Reserve Chair Jerome Powell’s short presser, he did just that. Chair Powell stated that “the time has come” for the Federal Reserve to cut interest rates, the first public admission of this policy change. Over the past few months, the Federal Reserve has gained further confidence that inflation is falling to its 2% target while the labor market has sufficiently weakened. On Friday, he stated that the Federal Reserve does not seek or welcome further cooling in labor market conditions and that the downside risks to employment have increased, a stark change from the last time he spoke.

During the week, both Existing Home Sales and New Home Sales were released. In the month of July, 3.95 million houses were sold, slightly higher than the 3.94 million that was expected. This represents the first year-over-year increase in five months but the weakest July since 2010. In the marketplace, consumers are seeing more choices as interest rates have ticked lower, but prices remain at record highs. The median sales price now sits at $422,600, up 4.2% from a year earlier. New Home Sales painted a slightly better picture for housing activity, increasing 10.6% to a seasonally adjusted 739k units. This marks the highest level in more than a year as consumers have taken advantage of the decline in mortgage rates.

Equity markets continued their rally higher. The three major U.S. indices, the DOW (41,175), S&P 500 (5,635) and Nasdaq Composite (17,878) all rose in unison, up approximately 1.40% for the week. The yield on the 10-Year U.S. Treasury closed the week at 3.80%, lower by 8 basis points.

Key economic reports next week include Personal Consumption Expenditures, the second reading of 2Q GDP, as well as a highly anticipated earnings report for Nvidia.