Last week, Fed Chairman Jerome Powell’s speech at Jackson Hole provided investors with the news they were waiting for. Powell mentioned the possibility of interest rate cuts, which resulted in the market expecting cuts totaling 100 basis points by the end of the year. The CME FedWatch tool predicts a 25-basis-point cut in September, a potential 50-basis-point cut in November, and another 25-basis-point cut in December. This news helped the S & P 500 and Nasdaq bounce back from previous losses, finishing the week with gains of nearly 1.5%.
TJX Companies and Palo Alto Networks were among the best-performing stocks of the week. TJX Companies saw an increase of over 6.5% after a strong quarterly beat and raised guidance. Palo Alto Networks gained 4% following strong earnings and a positive outlook. However, Estee Lauder’s earnings report did not meet expectations, resulting in a decision to remove the stock from the portfolio.
Nvidia is set to report its fiscal 2025 second quarter earnings, with investors closely watching for guidance on the current quarter and commentary on supply and demand dynamics. Salesforce will also be reporting its fiscal 2025 second quarter results, with a focus on management’s commentary about deal activity in the enterprise software sector. Best Buy is expected to issue its second quarter earnings, with attention on the company’s marketing strategies for new AI-equipped hardware.
In addition to earnings reports, the week ahead includes important economic data releases. The government will provide the second look at U.S. economic growth in the second quarter, as well as the release of the personal consumption expenditures (PCE) price index, a key inflation measure that the Federal Reserve closely monitors. The Fed aims to bring inflation back down to its 2% target, with Powell expressing confidence that inflation is trending in the right direction.
Economists expect the second estimate of Q2 economic growth to remain at an annual rate of 3.1%. The release of the PCE price index is expected to show a year-over-year increase of 2.5% for the headline figure and 2.7% for the core rate.
The week ahead is filled with earnings releases and economic data reports. Some of the notable companies reporting include Abercrombie & Fitch, Chewy, Kohl’s, Best Buy, Dollar General, ULTA Beauty, Gap, and more. Economic data releases include GDP, weekly jobless claims, pending home sales, and the University of Michigan consumer sentiment index. Friday will see the release of the PCE price index and the final August consumer sentiment reading.
Overall, Wall Street saw back-to-back weekly gains amidst an overbought market. The upcoming week brings significant events such as earnings reports from key companies like Nvidia, Salesforce, and Best Buy, as well as crucial economic data releases. Investors will continue to monitor the market closely to navigate through the latest developments and maintain a strategic investment approach.