Markets “In a Nutshell” for August 28, 2023
Investment Week at a Glance
Stocks finished mixed for the week. The Dow Jones Industrial Average fell 0.40%, the S&P 500 was up 0.80%, and the NASDAQ rose 2.30%. Foreign stocks (MSCI EAFE) were also up, rising 0.80%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 4.23%. (Data source: Wall Street Journal)
Jackson Hole Symposium
Last week was the annual Jackson Hole symposium for the Federal Reserve. Although no decision on rates or policy is made during this event, the market pays close attention as Fed Chair Powell gives a forecast of what is to come in the near future. Last year Powell’s speech sent markets lower and as he stated the Fed’s determination to fight inflation even if it resulted in “some pain” for U.S. households. This year, Powell did not signal too much other than the Fed will continue to pay close attention to the data regarding future rate hikes. This was no surprise to the market as there was very little movement following his speech. Overall, the major points were that the Fed wants inflation at 2% and is determined to get there.
Heading into Fall
The market is wrapping up the summer season after a strong start but has cooled off since the beginning of August. Historically, market volatility typically picks up in the months of September and October. When comparing where we are now to last year it looks much more positive as inflation is much lower and market volatility has been calm overall the past few months. Earnings estimates are positive for Q3 of 2023 for the first time since Q3 of 2022. This is good news for the market as for the market to move higher over an extended period, earnings need to increase for the overall market, not just the top few companies. We also may be nearing the end of rate hikes which was unsure last year when that would happen as inflation was still much higher. Overall, the economy looks to be staying strong and recession worries are not nearly as high as they were last year.
When did the Fed start meeting in Jackson Hole once a year? (Scroll Down for Answer)
Have a Great Week!
4. 1982. The Fed started going to Jackson Hole in 1982. One reason Jackson Hole was chosen is because in 1982 the Fed Chair was Paul Volcker and he was an avid fly fisher and the Kansas City Fed wanted to entice him to attend.