US stocks close green, Treasury yields waver as crucial data awaits

Even though the indexes once again had a very good day with triple-digit advances, the consensus was that this unofficial final week of summer is historically not to be trusted and that investors will be on the sidelines until we get back into earnings season.  There will be a great deal of new data coming this week ahead of the holiday that will tell the markets more about coming Fed rate intentions and the odds of another pause in September now stands at 80.5%. Volume was very light at 8.2 billion and is expected to remain that way throughout the week. 

US stocks close green, Treasury yields waver as crucial data awaits

By Stephen Culp

Mon August 28, 2023 4:50 PM

DJ: 34,346.90  +247.48       NAS: 13,590.65  +126.67       S&P: 4,405.71  +29.40     8/25

DJ: 34,559.98  +213.08       NAS: 13,705.13  +114.49       S&P: 4,433.31  +27.60     8/28

NEW YORK, Aug 28 (Reuters) - Wall Street ended higher and U.S. Treasury yields retraced earlier gains on Monday, capping the first session of a week likely to be light in volume but heavy with economic data that could affect whether the Federal Reserve will take a rate-hike breather in September.  All three major U.S. indexes advanced but closed off session highs amid light trading at the start of what is considered the last unofficial week of summer, one jam-packed with closely watched economic indicators.

"I wouldn't trust what happens in the markets this week," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. "It's a week where, historically, there's not much going on and people are on the sidelines, so any news gets exacerbated."  "We're in a news lull until we get back into earnings season and there's more action and discussion coming from the Fed," Carlson added.

In remarks delivered on Friday at the central bank conference in Jackson Hole, Wyoming, Fed Chair Jerome Powell said inflation was still too high, but noted that economic uncertainty called for "agile" monetary policy making and said that the Fed would proceed "carefully."  Beijing announced that it would cut its stamp duty on stock trading in half, following its earlier move to support affordable housing on Friday, which fueled hopes that China's languishing post-COVID economy might shift out of low gear.

"China is having economic difficulty, they're not making the bigger moves that are necessary to compensate," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. "They’re just making fractional moves."  "It all stems back to COVID," Pavlik said. "It's still reverberating through their economy."

Ahead of the upcoming Labor Day weekend, a barrage of high-profile economic data is expected, including the August employment report, PCE inflation, ISM PMI and the Commerce Department's second take on April-June GDP, all of which could provide insight regarding the Fed's next policy move.  At last glance, financial markets have priced in an 80.5% likelihood that the central bank will let interest rates stand at the conclusion of next month's September meeting.

The Dow Jones Industrial Average (.DJI) rose 217.19 points, or 0.63%, to 34,559.98, the S&P 500 (.SPX) gained 27.6 points, or 0.63%, to 4,433.31 and the Nasdaq Composite (.IXIC) added 114.49 points, or 0.84%, to 13,705.13. 

Benchmark 10-year notes last rose 8/32 in price to yield 4.2098%, from 4.239% late on Friday.  The 30-year bond last rose 6/32 in price to yield 4.2831%, from 4.295% late on Friday.  The greenback touched a nine-month high against the Japanese yen, but inched lower against a basket of world currencies after the Fed kept open the possibility of further policy tightening.  The dollar index (.DXY) fell 0.06%, with the euro up 0.19% to $1.0814.  The Japanese yen weakened 0.07% versus the greenback at 146.55 per dollar, while Sterling was last trading at $1.26, up 0.18% on the day.

Oil prices eased back from earlier gains driven by Beijing's steps to jumpstart its flagging economy due to worries that additional tightening from the Fed could be in the cards.  But the threat of a tropical storm off the U.S. Gulf Coast suggested a potential supply disruption.  U.S. crude rose 0.34% to settle at $80.10 per barrel, while Brent settled at $84.42, down 0.07% on the day. 

Per the CBOE, volume was way below average at 8.2 billion.