U.S. stock benchmarks rallied to a round of intraday records Friday, with indexes picking up steam after Federal Reserve Chairman Jerome Powell affirmed the central bank’s strategy of gradually normalizing interest rates, helping investors focus on strong economic and quarterly results that have helped support investment appetite thus far.
Powell’s comments at a closely watched speech in Jackson Hole, Wyo., hint at criticisms leveled by President Donald Trump, who has said the Fed’s rate-hike policy is undermining the administration’s efforts to stimulate economic growth.
Check out: Ex-Wall Streeter Powell says Fed needs to nix old-time thinking, raise rates in small doses
What are the main benchmarks doing?The Dow Jones Industrial Average DJIA, +0.61% rose 162 points, or 0.%, to 25,819, the S&P 500 index SPX, +0.63% added about 18 points, or 0.7%, to 2,875.60, hitting an intraday record above 2,875.
Meanwhile, the Nasdaq Composite Index COMP, +0.84% added 68 points, or 0.9%, to 7,946, carving out an intraday record at 7,949.25, marking the first all-time high since July 25.
For the week, the S&P is up 0.9% and on track for its second straight weekly gain, an upswing that took it to a record earlier this week and has it not far from one presently. The Nasdaq is up 1.6% on the week, while the Dow is up 0.6% thus far this week, which would mark the second straight positive week for the blue-chip average.
On Thursday, major indexes ended slightly lower in a quiet trading session marked by low volume.
What’s driving the market?At the Kansas City Federal Reserve’s annual monetary policy symposium in Jackson Hole, Wyo., Powell said he sees two risks surrounding rate hikes, which he outlined as “moving too fast and needlessly shortening the expansion, versus moving too slowly and risking a destabilizing overheating.”
See: Fed’s Powell plays down risk of overheating, still expects gradual rate-hike pace
He said: “I see the current path of gradually raising interest rates as the [Federal Reserve’s] approach to taking seriously both of these risks.”
The central banker’s commentary marked his first public appearance since President Trump criticized the central bank’s policy plans, saying he wasn’t “thrilled” with the Fed’s policy path and saying that he thought Powell was a “cheap money” policy maker, at a fundraiser in the Hamptons.
Market participants said the speech, economic data, including a report on durable orders on Friday, and strong quarterly results, have helped to support stock buying on Wall Street.
That said, trading has been quiet of late, with light volumes and narrow trading ranges, a function of a waning period of earnings and a seasonal muted period for trade.
Powell’s speech comes two days after the release of minutes from the Fed’s most recent confab, where the central bank indicated broad-based support for another interest-rate hike in September, with many officials stating that as long as economic data remain strong, “it would likely soon be appropriate to take another step in removing policy accommodation.”
Elevated trade tensions between the U.S. and its major trading partners will also remain in view as the latest round of talks between the U.S. and China failed to produce any visible sign of progress. Reuters on Friday reported that China would continue to retaliate as the U.S. imposes tariffs, although the measures would be as targeted as possible as to avoid harming businesses in China, both domestic and foreign.
Don’t miss: Here’s why stocks are focused almost exclusively on trade, in one chart
This past week was perhaps most notable for the legal issues surrounding President Donald Trump. On Tuesday, the president’s former lawyer Michael Cohen said he violated campaign-finance law at Trump’s direction, while former Trump campaign chairman Paul Manafort was found guilty on eight charges, including tax fraud.
Stocks have mostly shrugged off the political news thus far, but any larger fallout could add to the uncertainty surrounding trade policy and the coming midterm elections. Trump on Thursday said that the market would crash and that “everybody would be very poor” if he were to be impeached.
Read: Here’s why rising Trump impeachment odds aren’t rattling stock-market investors
What data are in focus?U.S. durable-goods orders fell in July for the third time in four months, driven by a drop in new contracts for passenger jets from Boeing Co. Orders for long-lasting goods fell 1.7% in July, the government said Friday. Economists surveyed by MarketWatch had forecast a 1.1% decline in orders for durable goods—products made to last at least three years.
What are strategists saying?“It struck me as a little bit dovish,” Karyn Cavanaugh, senior market strategist at Voya Investment Management told MarketWatch, in reference to Powell’s speech.
I think it was refreshing for the market to hear Powell say that inflation wasn’t an issue and that they are OK with it. It is a weight off the market’s mind,” the Voya strategist said.
What stocks are in focus?Autodesk Inc. ADSK, +14.86% late Thursday reported second-quarter earnings and revenue that beat expectations. Shares surged more than 15%.
HP Inc. HPQ, -2.09% late Thursday reported third-quarter revenue that missed expectations, although its adjusted earnings came in above forecasts. The stock edged 2% lower.
Intuit Inc. INTU, +1.37% late Thursday said that its chief executive officer and its chief technology officer planned to step down. The company named their replacements and reported adjusted fourth-quarter earnings that beat expectations. Shares of Intuit edge up by 1.3%.
SunTrust Robinson Humphrey upgraded Netflix Inc. NFLX, +4.29% to buy from hold. The stock rose 4.2%.
Enbridge Inc. ENB, -1.83% agreed to buy Spectra Energy Partners SEP, +3.06% in a deal valued at $3.3 billion. Shares of Spectra were up 3.1%.
Hibbett Sports Inc. HIBB, -29.68% reported second-quarter revenue and same-store sales that were below expectations. It also cut its 2019 profit outlook. Shares of the company are down 29%.
Buckle Inc. BKE, -5.58% shares were down nearly 6% after the company reported second-quarter results that topped expectations.
Ross Stores Inc. ROST, +0.12% gave a full-year outlook that was below expectations. Gap Inc. GPS, -9.83% posted second-quarter earnings and sales that beat expectations, but same-store sales at its flagship stores that lagged behind. Shares of Gap were down 11%, while those for Ross edged 0.3% lower.
S&P Dow Jones Indices late Thursday said that Arista Networks Inc. ANET, +9.21% would join the S&P 500, replacing GGP Inc. GGP, -0.44% which is being bought by Brookfield Property Partners LP BPY, -1.63%
Shares of Papa John’s International Inc. PZZA, +4.14% were up after reports that the pizza maker had hired bankers to explore its strategic options and stabilize the company after its longstanding CEO was ousted. Shares were up 4.2%.
What were other markets doing?Oil futures CLV8, +1.84% jumped by 1.8% in recent action, while gold futures GCZ8, +1.68% also staged a sharp surge, while the ICE U.S. Dollar Index DXY, -0.57% extended its daily and weekly slide.
European stocks edged higher, while Asian markets finished the session mixed.
Providing critical information for the U.S. trading day. Subscribe to MarketWatch's free Need to Know newsletter. Sign up here.
