US stocks rise as investors await policy clues from Fed Chair Powell at Jackson Hole

  • US stocks closed higher Thursday, leaving the S&P 500 to land a second straight win. 
  • Investors took on some risk before Federal Reserve Chairman Jerome Powell speaks on Friday. 
  • The market is still facing the prospect of a US recession, said Truist Advisory’s Lerner. 

US stocks rose Thursday as investors embraced some risk before Federal Reserve Chair Jerome Powell grabs the attention of global financial markets with a speech on monetary policy at the central bank’s marquee annual conference in Jackson Hole, Wyoming. 

The S&P 500, the Nasdaq Composite, and the Dow Jones Industrial Average each rose for a second consecutive session after losing ground for three days prior. All 11 of the S&P 500’s sectors moved higher. Among individual stocks, Tesla moved lower as the electric vehicle maker’s 3-for-1 stock split went into effect.

Stocks rose after China unexpectedly announced billions of dollars worth of stimulus measures to help slumping growth in the world’s second-largest economy. Investors also sifted through US economic data that featured a decline in weekly jobless claims. A second reading of second-quarter gross domestic product suggested the economy contracted by 0.6% compared with a contraction of 0.9% in the preliminary reading. 

Federal Reserve officials gathered Thursday in Jackson Hole, Wyoming, for their annual symposium. Fed Chair Jerome Powell will speak on Friday at 10 a.m. Eastern time. 

Here’s where US indexes stood at 4:00 p.m. on Thursday: 

The S&P 500 has trimmed its year-to-date decline to 12%. Stocks currently are in a consolidation area, Keith Lerner, co-chief investment officer at Truist Advisory Services, told Insider. 

“At the June lows, investors were pricing in a recession, at least by historical metrics,” as the S&P 500 had fallen by 24%, he said. A stronger-than-expected jobs report and easing headline inflation for July each helped push the S&P off those lows and “investors were just caught off-sides as far as positioning.” 

“Our view is that investors priced with that recession too soon. We still think there’s some recession risk as we look into next year,” Lerner said. “We think that monetary policy is still becoming tighter and that is still going to be a concern.”

Around the markets, Alibaba and other US-listed Chinese stocks jumped following a Wall Street Journal report the US is nearing a  deal related to audits of Chinese firms.

The CIO of Ray Dalio’s Bridgewater says asset markets will tumble 20%-25% as the Fed’s tightening has yet to be fully priced in. Meanwhile, markets guru Harry Dent foresees a 40% drop in the Nasdaq and an economic depression. 

Warren Buffett’s Berkshire Hathaway logged a $4 billion gain on Occidental Petroleum in under six months as the energy stock surged to nearly a four-year high.

Oil prices turned lower. West Texas Intermediate crude fell 1.7% to $93.25 per barrel. Brent crude, the international benchmark, lost 1% to trade at $100.17. 

Gold rose 0.4% to $1,768.50 per ounce. Bitcoin slipped 0.5% to $21,598.11. 

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