John Hancock: Weekly Market Recap Week Ended August 26th

Hawkish words

U.S. stock indexes fell more than 3% on Friday after U.S. Federal Reserve Chair Jerome Powell said the Fed remains committed to extending its policy of aggressively raising interest rates, even at the risk of fueling a potential recession. Speaking in Jackson Hole, Wyoming, Powell said recent data showing a cooling of inflation “falls far short” of what the Fed “will need to see before we are confident that inflation is moving down.”

Yields impact

U.S. government bond yields edged higher after Fed Chair Powell said he expects to extend the policy of aggressively lifting interest rates. The yield of the 10-year U.S. Treasury bond climbed to around 3.07% in morning trading before settling to around 3.04% in the afternoon. It ended the previous week at 2.98%.

Growth style lags

While both equity styles posted negative results for the week, growth stocks trailed their value counterparts by a wide margin. An index of U.S. growth stocks fell by about 4.6% while a value index retreated 3.2%, extending the value style’s year-to-date performance leadership.

Jobs ahead

A monthly U.S. labor market update due out on Friday will show whether July’s upward momentum in jobs growth extended into August, despite high inflation. In July, the economy generated 528,000 new jobs—the biggest monthly gain in five months—while the unemployment rate slipped to 3.5%.

Source: https://wmr.jhinvestments.com/