The week ended in a positive way. The S&P 500 broad market index rose 1.5%, while the capitalization of the Nasdaq 100 increased 2.3%. Both indicators renewed their historical highs again. Investors are encouraged by the fact that the rate of spread of the delta strain may have peaked, followed by a decline. Fed spokesman Ballard said that data on an increase in the number of vaccinated citizens amid the spread of a new strain of coronavirus is good news, noting that the increase in the number of new infections will peak at some point, after which it will decline. The estimate of US GDP growth in the second quarter was revised upward. The U.S. economy expanded 6.6% in the second quarter of 2021 at an annualized rate. Preliminary data estimated a 6.5% rise.
The most important event of the week was Friday’s speech by Fed Chairman Jerome Powell at the annual economic symposium in Jackson Hole. The speech was not as harsh as many experts had predicted. Powell sees the recent surge in consumer prices as temporary. At the same time, he noted that if inflation remains high, the FRS will take action to reduce price pressure. Powell said he was one of the Fed officials who support the idea of scaling down the $ 120 billion per month asset buyback program if the economy develops in line with the regulator’s forecast. Thus, the Fed may begin to wind down its stimulating monetary policy this year. At the moment, the pace of economic recovery in the US exceeds expectations. The Fed chairman called the tightening of monetary policy at the moment a “particularly harmful” mistake, but clarified that if a steady rise in inflation becomes a serious problem, the FOMC “will definitely react.”
A lot of macroeconomic statistics will be published this week. The Conference Board’s US Consumer Confidence Index for August will be released on Tuesday. EU justice and interior ministers will hold an emergency meeting on Afghanistan, while on the last day of the summer, the US plans to withdraw all troops from the country. A number of macroeconomic indicators will be released on Wednesday in the US. Markets will be evaluating “preliminary” data for August from the labor market agency ADP. On this day, the OPEC + ministerial meeting starts. The spread of a new strain of coronavirus could make adjustments to production plans to support oil prices. On Thursday, the following data for July will be published in the US: trade balance, orders for manufactured goods, as well as updated data on orders for durable goods. Investors will pay special attention to the official data on the labor market for August, which will be published on Friday. The statistics for the previous two months were significantly better than expected, so good figures for the last month of the summer may have a positive effect on the Fed’s decision to cut back on the asset repurchase program.