The Impact of Federal Reserve Comments on U.S. Stock Indices: Federal Reserve Chairman Jerome Powell’s
comments have bolstered the recovery of U.S. stock indices,
This resulted in the market’s best trading day being synchronized with Federal Reserve announcements in two years.

Contents

Performance of Major Indices

Performance of Individual Stocks

Impact of Federal Reserve Comments

Statement and Monetary Policy Adjustments

Market Performance After the Announcement

Reactions and Analyses

Future Expectations

Performance of Major Indices

The S&P 500 index recorded its largest advance since February, while the Nasdaq 100 index rose by 3%.
The Bloomberg measure of the ‘Magnificent Seven’ (Meta, Apple, Microsoft, Tesla, Amazon, Nvidia, Alphabet) jumped by 3.7%,
and the Russell 2000 index of small companies increased by about 2.1%.

Performance of Individual Stocks

Nvidia’s shares increased by 13% based on optimistic analyst calls.
Meta’s shares rose after market closure due to sales exceeding expectations,
while Qualcomm’s shares provided strong revenue forecasts.

Impact of Federal Reserve Comments

Cautious comments from Federal Reserve Chairman Jerome Powell helped broaden the rise of U.S. stock indices.

Powell mentioned that the bank might lower interest rates “as soon as possible” in September,
following the Federal Open Market Committee’s decision to keep the federal funds rate unchanged from 5.25% to 5.5%.

Statement and Monetary Policy Adjustments

Policymakers made several adjustments to the statement’s language after their two-day meeting.
The statement shifted to saying the committee is “attentive to risks” to its dual mandate,
rather than the previous focus solely on inflation risks.

Market Performance After the Announcement

An exchange-traded fund worth $563 billion tracking the S&P 500 index rose by 1.6%.
The cross-asset rally on Wednesday was the largest of the year for sessions following monetary policy announcements.
The Bloomberg measure of the ‘Magnificent Seven’ added 3.5%, while the Russell 2000 index of small companies added 0.5%.

Reactions and Analyses

Neil Dutta from Renaissance Macro Research Described the press conference as more pessimistic than the statement,
adding that the committee is simply waiting,
and the data already points to the direction the Federal Reserve wants to see.

Peter Boockvar from The Boock Report: Powell wants to say today,
“Let’s do it,” but he knows he does not have to commit before getting more time and data.

Future Expectations

Interest rate swaps showed traders fully priced in a quarter-point rate cut in September and about 70 basis points this year.

David Russell from TradeStation Mentioned that the data has moved in Powell’s direction,
and he is now ready to follow through.
He added that Friday’s job data and the Consumer Price Index in two weeks are the following big points,
and he is expecting more explicit messages from Powell at Jackson Hole in late August.

The Impact of Federal Reserve Comments on U.S. Stock Indices

The Impact of Federal Reserve Comments on U.S. Stock Indices

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