Stocks gained on Thursday as sentiment was buoyed by fiscal stimulus in China, as investors eagerly awaited the Jackson Hole economic conference which begins the day ahead.
future for the
Dow Jones Industrial Average
gained 100 points, or 0.3%, after the index advanced 59 points on Wednesday to close at 32,969.
futures rose 0.6% and tech stocks
was about to gain 0.8%.
Overseas, the pan-European
rose by 0.2% and that of Hong Kong
Hang Seng Index
jumped 3.6%, leading Asian stocks higher on economic news from China.
The biggest day for markets this week is set to come on Friday with inflation data and a key speech from Federal Reserve Chairman Jerome Powell, but stocks were still up on Thursday after snapping a three-day streak losses on Wednesday.
“A supporting factor has been a new Chinese State Council package that includes 1 trillion yuan largely focused on infrastructure spending,” said Deutsche Bank analyst Henry Allen.
This 19-point package of fiscal stimulus from China has supported Asian equities and risk sentiment more broadly, and appears to be spreading optimism in the US pre-market session. Although analysts have noted that this is unlikely to be a panacea for the stunted growth of the world’s second-largest economy, the measures should still provide some support for China’s gross domestic product and debt investment.
Beyond China, the Jackson Hole economic conference kicks off Thursday, with Federal Reserve Chairman Jerome Powell’s much-anticipated speech scheduled for Friday. Investors will be watching Powell’s speech closely for indications of the central bank’s monetary policy trajectory – crucial amid shifting expectations about whether the Fed will continue to tighten financial conditions or move towards easing. in 2023.
“The markets have become increasingly worried [Powell’s speech] over the past few days, and which has seen bond yields rise sharply in hopes that it will deliver a hawkish message,” said broker analyst Michael Hewson.
While Powell’s speech will likely be the headline event of the week – with the Fed’s favorite inflation measure, the Personal Consumption Expenditure (PCE) Index, also due out on Friday – there is more recent news. of the central bank.
Atlanta Fed President Raphael Bostic told the Wall Street Journal it’s a toss-up between whether the central bank raises rates 50 basis points or 75 basis points in September. The Fed hiked 75 basis points, or three-quarters of a percentage point, in June and July, the biggest increases since 1994.
A stock market rally in July — the S&P 500’s best month since 2020 — came on the back of optimism that the Fed had reached its peak in hawkishness, but that narrative largely crumbled in August amid a return of investor nervousness about inflation and the economy. While raising interest rates is an effective way to fight inflation, rising borrowing costs and reduced economic demand also increase the risk of a downturn and recession.
That’s why investors have been waiting for Powell’s speech all week, hoping he will give the market much-needed clarity on policy. But some on Wall Street aren’t enthusiastic about the amount of fresh news Powell will bring.
“We expect any revelation of the Jackson Hole commentary to be marginal to the index’s continued oscillation between hard and soft landing expectations,” said Citi analyst Scott Chronert, referring to a “hard landing” in which the Fed cools inflation but is unable to avert recession.
“Some additional hawkishness can be gauged from last week’s pullback. For us, the trend points to an increasing likelihood of mild recessionary effects in the first half of next year,” Chronert said.
Here are the stocks in motion on Thursday:
(ticker: BABA) jumped 3.5% in the US pre-market on news of China’s fiscal stimulus, with stocks in tech peers
(JD) up 4.5% and
(NTES) up 2.5%.
Write to Jack Denton at email@example.com