Weekly Economic Update: August 30th, 2021
Presented by Nicholas Wealth Management
August 30th , 2021
Weekly Market Update
In this week’s recap: Federal Reserve says tapering likely in 2021, but no interest rate hikes for now.
The Week on Wall Street
The stock market powered to record levels last week amid talk of Fed tapering and a deceleration in new Delta variant cases.
The Dow Jones Industrial Average gained 0.96%, while the Standard & Poor’s 500 increased 1.52%. The Nasdaq Composite index led, picking up 2.82%. The MSCI EAFE index, which tracks developed overseas stock markets, rose 1.39%.1,2,3
Pushing Higher
Stocks surged to begin the week as investor sentiment improved on news of the FDA’s approval of its first COVID-19 vaccine, a strong housing number and comments by the Federal Reserve Bank-Dallas president that he would support delaying tapering if the Delta variant spread worsened.
Stocks continued their climb through midweek, pushing the S&P 500 to another record high and the NASDAQ Composite above 15,000 for the first time. The S&P 500 and NASDAQ Composite closed the week at record highs following Fed Chair Powell’s comments that Fed is likely to begin winding down its monthly bond purchases (aka tapering) by year-end, though no interest rate hikes were imminent.4
Powell Speaks
At last week’s Jackson Hole Economic Policy Symposium, Fed Chair Jerome Powell’s speech on Friday provided further insights into Fed plans to begin tapering. Powell said that the Fed may likely commence tapering prior to year-end, adding that the wind down of bond purchases should not be seen as a signal for future rate hikes. Powell emphasized that labor market conditions remain short of the Fed’s target for maximizing employment. He also reiterated his case for why inflation remains a transitory phenomenon.4
With a number of Regional Federal Reserve Bank presidents already supportive of tapering, investors may see more definitive steps coming out of next month’s FOMC (Federal Open Market Committee) meeting.
Tip of the Week
Media
Be sure to subscribe to our YouTube page for all of David’s media commentaries CLICK HERE!
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Investors are focused on the next 6-12 months. They know the Democrats will eventually pass their multi-trillion spending bill. David Nicholas joined Stuart Varney on Fox Business last Tuesday, 8/24, to discuss why the market is rising amid multiple crises.
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Gross incompetence from the White House is on display. The out-of-control situation adds geopolitical risk to markets. David Nicholas joined Charles Payne on Fox Business last Thursday, 8/26, to discuss how the market is reacting to the volatility.
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CITATIONS:
1.The Wall Street Journal, August 27, 2021
2.The Wall Street Journal, August 27, 2021
3.The Wall Street Journal, August 27, 2021
4.CNBC, August 27, 2021
