- Barry Adams
- 25 Aug, 2023
- New York City
Stocks advanced on Friday and market indexes are likely to halt a three-week slide on the sustained gains in tech stocks.
Investors looked ahead to Federal Reserve Chair Jerome Powell's speech at 10:00 a.m. ET and hoped to gain insights into the U.S. economy.
Federal Reserve policymakers have perfected the craft of double-speak and "data-dependent" policy that has so far failed to bring down inflation to the target level of 2%.
Investors have been divided but more are convinced that the Federal Reserve is more likely to lift rates in the coming months and rates are likely to stay higher for longer this year and the next.
The economy's vigor was confirmed by Chairman Powell in his speech.
“So far this year, GDP (gross domestic product) growth has come in above expectations and above its longer-run trend, and recent readings on consumer spending have been especially robust,” noted Powell.
“In addition, after decelerating sharply over the past 18 months, the housing sector is showing signs of picking back up.
Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy."
U.S. Indexes & Yields
The S&P 500 index traded up 0.2% to 4,385.33 and the Nasdaq Composite gained 0.1% to 13,476.38.
The yield on 2-year Treasury notes increased to 5.02%, 10-year Treasury notes inched higher to 4.26% and 30-year Treasury bonds edged up to 4.28%.
Crude oil increased $0.69 to $78.31 a barrel and natural gas prices decreased 1 cent to $2.51 a thermal unit.
U.S. Stock Movers
Nordstrom Inc dropped 10.5% to $15.05 after the fashion apparel retailer reported better-than-expected quarterly results, revenue of $3.7 billion and diluted earnings per share of 84 cents.
But investors sold stock after the company reiterated its full-year sales estimate to decline between 4% and 6%.
Intuit Inc soared 2.9% to $512.99 after the software company reported quarterly results that were ahead of market expectations.
The software company said revenue in the quarter increased 12% to $2.71 billion and net income of $89 million compared to a loss of $56 million and diluted earnings per share of 32 cents from (0.20 cents) a year ago.
Ulta Beauty Inc decreased 3.3% to $408.79 after the specialty retailer reported a decline in comparable sales and mixed quarterly results.
Net sales in the quarter ending in July increased 10.1% to $2.5 billion from $2.3 billion and net income increased $300.1 million from $295.6 million and diluted earnings per share $6.02 from $5.5.70 a year ago.
- Bridgette Randall
- 25 Aug, 2023
- Frankfurt
European markets traded higher on the final day of the week and bond yields the euro edged down.
Bond yields declined after investors speculated that the European Central Bank may pause rate hikes and avoid dipping the economy into a recession.
Investors have been worried that policymakers are juggling to control inflation while keeping the economic expansion going and the labor market healthy.
The European Central Bank's balancing act has so far avoided the region's economy dipping into a recession but inflation has still stayed significantly above the preferred level of 2%.
German Economy Stagnates In Q2
The German economy was flat in the second quarter compared to the previous quarter and declined 0.2% from a year earlier, the Federal Statistics Office or DeStatis reported today.
GDP declined 0.6% after adjusted for price only, as there was one less working day in the second quarter compared to a year ago.
The German economy stabilized after two quarters of decline when the economy contracted 0.1% in the first quarter and shrank 0.4% in the fourth quarter of 2022.
Compared with the previous quarter, gross fixed capital formation in machinery and equipment increased 0.6%, slightly exceeding gross fixed capital formation in construction 0.2% after price, seasonal and calendar adjustment.
In the second quarter, seasonal, calendar and price adjustments, total exports of goods and services decreased 1.1% from the first quarter and the imports of goods and services remained unchanged in foreign trade.
In other economic news, the number of people registered as jobless in mainland France jumped 23,800 from the previous month to 2.817 million in July, the steepest increase since April 2021.
The sharp jump in registered unemployed people lifted unemployment levels to their highest in the year sofar.
Europe Indexes & Yields
The DAX index increased 0.3% to 15,667.25, the CAC-40 index advanced 0.5% to 7,252.73 and the FTSE 100 index edged higher 0.4% to 7,361.38.
For the week, the DAX index increased 0.4%, the CAC40 index advanced 0.7% and the FTSE 100 index gained 0.5%.
The yield on 10-year German bonds decreased to 2.55%, French bonds traded lower to 3.08%, the UK gilts edged down to 4.45% and Italian bonds fell to 4.21%.
The euro edged to the lowest level since mid-June on the hopes that the central is more likely to pause its rate hike campaign and assess the impact of the multiple rate hikes on the economy.
The euro edged lower to $1.079, the British pound to $1.256 and the U.S. dollar fetched 88.59 Swiss cents.
Natural gas prices traded volatile after local reports showed some progress between the workers' unions and Woodside Energy and Chevron in averting a long strike at LNG terminals.
Brent crude increased $1.23 to $84.68 a barrel and the Dutch TTF natural gas increased €2.21 to €34.20 per MWh.
Europe Stock Movers
CMC Markets Plc plunged 11.3% to 108.20 pence after the company estimated lower revenue trend in the fiscal year 2024 on demand weakness.
LM Ericsson AB Class B jumped 0.2% to 54.0 Swedish krona after the company said it renewed a multi-year global patent cross-license with China-based Huawei Technologies Co, Ltd.
Metals and energy stocks traded higher after base metal and crude oil prices advanced.
BP Plc gained 1% to 478.50 pence and Shell Plc increased 0.7% to 2,384.60 pence.