Wall St ends higher, extending rally ahead of Jackson Hole

By Stephen Culp

NEW YORK (Reuters) -U.S. stocks closed firmer on Monday, building on their largest weekly percentage gain of the year as investors focused on the Democratic National Convention and the upcoming Jackson Hole Economic Symposium.

All three major U.S. stock indexes closed higher, with the S&P 500 and the Nasdaq extending their winning streak to eight consecutive sessions as equities continued to rebound from a steep sell-off two weeks ago driven by recession fears.

Recent data has shown consumer resiliency despite economic softening, boosting expectations that the Federal Reserve will start lowering interest rates at its September policy meeting by cutting the Fed funds target rate by 25 basis points.

"What's behind (this rally) is the hope that the spigots will continue to be open with the Fed potentially cutting rates in September," said Paul Nolte, senior wealth advisor & market strategist at Murphy & Sylvest in Elmhurst, Illinois.

"Money is looking for a place to go, and it's going into the equity markets."

A slim majority of economists polled by Reuters say the Fed will implement three 25-basis-point rate cuts by the end of the year, and the economy will probably be able to avoid recession as inflation abates.

The Jackson Hole Economic Symposium kicks off on Thursday, and Fed Chair Jerome Powell's remarks on Friday will be parsed for clues regarding the U.S. central bank's path from restrictive to neutral monetary policy.

"I think (Powell) is going to reiterate some of the talking points that the Fed made, that they're getting a little bit more comfortable with the fact that inflation is coming down to target," Nolte added. "They're comfortable with the economy doing reasonably well, and that will be interpreted by the markets as a door-opener for a September rate cut."

The Democratic National Convention in Chicago, which starts on Monday, could fuel market volatility that is already heightened due to light, late-summer trading volume.

The CBOE market volatility index a gauge of investor anxiety, retreated at a record pace last week from a four-year high amid growing optimism of a soft landing.

Goldman Sachs lowered the odds of a U.S. recession in the next 12 months to 20% from 25% following the latest weekly jobless claims and retail sales reports.

According to preliminary data, the S&P 500 gained 54.05 points, or 0.97%, to end at 5,608.30 points, while the Nasdaq Composite gained 245.05 points, or 1.39%, to 17,876.77. The Dow Jones Industrial Average rose 232.57 points, or 0.57%, to 40,892.33.

Advanced Micro Devices (NASDAQ:AMD ) rose after the chipmaker said it plans to acquire server maker ZT Systems for $4.9 billion to expand its artificial intelligence portfolio to better compete with Nvidia (NASDAQ:NVDA ).



B. Riley Financial RILY.O extended its drop of over 65% last week. Co-founder and co-CEO Bryant Riley had offered to buy the bank on Friday after it warned of a hit from its investment in Vitamin Shoppe-owner Franchise Group (NASDAQ:FRG ).

Quarterly results from cybersecurity firm Palo Alto Networks (NASDAQ:PANW ), retailer Target and home improvement chain Lowe's (NYSE:LOW ) are due later this week.

Source: Investing.com