Economy
It was a quieter week in terms of new economic developments following last week's annual Federal Reserve meeting at Jackson Hole. Last week Fed Chair Jerome Powell effectively put us all on notice that the first of what is likely to be several interest rate cuts will be here in a few weeks when the FOMC meets on September 18. The market is still fairly split on whether we'll see a 0.25% rate cut or a 0.5% cut. The former seems more likely than the latter when you consider the Fed began its rate hiking cycle by an initial increase of 0.25%. A 0.5% cut right off the bat might send a signal to the markets that the Fed is aware they are maybe too late in delivering the first rate cut, so a quarter of a point may give them the appearance of more control over the situation. Next Friday, we'll have the August payrolls report. Last month's numbers came in well below expectations, signaling some weakness in the labor market. Weakness that was pointedly called out by Jerome Powell in his latest remarks, and weakness that he is hoping does not gain momentum.
Markets
Nvidia's earnings call on Wednesday afternoon was one of, if not the most anticipated earnings calls this quarter. It's a company that has become incredibly important not only to the stock market but to the economy as well. The company had reportedly been expecting delays in it's newest processor chip, and there have been concerns that as goes Nvidia, so goes the rest of the market. That was certainly the theme of the stock market last year as the so-called Magnificent Seven stocks were responsible for the vast majority of the gains we saw. However, contrary to that belief, Nvidia shares fell following their disappointing earnings call, yet the rest of the market moved higher to end the week. This is an indicator of a healthy bull market rally. The money that flowed out of Nvidia stock Thursday simply moved into other areas of the stock market. The markets closed out August in the black, marking the fourth straight month of gains.
What We're Reading
- There’s a Quarterback Who’s About to Destroy College Football. You’ve Probably Never Heard of Him. - WSJ
- Final Countdown - Humble Dollar
Have a great weekend.
Dogwood Wealth Management