John Hancock: Weekly market Recap Week Ended August 22
Momentum shift
Stocks rallied on Friday to reverse a downward drift that had sent the S&P 500 to a five-session negative streak. The Dow outperformed, generating a 1.6% return for the week and posting its first record high of 2025. The S&P 500 ended up fractionally higher while the NASDAQ was down slightly.
Rising expectations
Market expectations for a September rate cut rose after Friday’s speech by the Fed chair. At Friday’s close, prices in rate futures markets implied an 83.1% probability that the Fed would cut its benchmark rate by a quarter-point, according to CME Group’s FedWatch tool.
Yield decline
Prices of U.S. government bonds rose modestly, sending their yields lower, after Friday’s Fed speech lifted expectations of a September rate cut. The yield of the 2-year Treasury posted the biggest decline; its yield finished Friday at 3.69% , down from 3.79% on Thursday. The 10-year Treasury‘s yield was around 4.26% on Friday.
PCE inflation ahead
With a Fed policy meeting coming up in mid-September, Fed officials are expected to closely track the Friday, August 29, release of data from the Personal Consumption Expenditures Index, the Fed’s preferred gauge for tracking inflation. The most recent release, covering June, showed PCE inflation at an annual rate of 2.6%, the highest in four months. Excluding food and energy prices, core inflation was 2.8%.
SOURCE: https://www.jhinvestments.com/weekly-market-recap#market-moving-news

