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Federal Reserve Chairman Jerome Powell in Jackson Hole in 2019. The symposium will be virtual for the second year in a row.

David Paul Morris / Bloomberg

The

Nasdaq Composite

Set a record for the close as markets rebound from their broad declines last week. Investors look to the Jackson Hole Symposium starting Thursday, a highlight of the year’s central economic and banking calendar.

The tech-heavy index gained 1.55% to 14,942.65, its 28th record in 2021, bringing its gain since the start of the year to nearly 16%. The S&P 500 and the

Dow Jones Industrial Average

also rose, with respective surges of 0.6% and 0.85%. The Dow Jones’ 215.63 point rise builds on a 225 point gain on Friday as it began to rebound from a drop of more than 600 points in the previous days.

“Much of the reason for last week’s shift in sentiment was growing concerns about the slowing global economy, as well as growing angst over rising infection rates and vaccine sustainability. “said Michael Hewson, analyst at brokerage CMC Markets.

Economic data is therefore essential for this week’s trading. The latest numbers show growth, but not all readings exceed estimates. The U.S. Manufacturing Purchasing Managers Index stood at 61.2, a missing estimate of 62.5. The US service purchasing managers index was 55.2, against 59.5 expected by economists. Both results showed increased activity.

Much of the missed activity on services was due to supply constraints, resulting in part from the Delta variant. “It is evident in today’s PMI that limitations on the supply side remain binding on much of the economy,” writes Andrew Hollenhorst, economist at Citigroup.

Existing home sales were $ 5.99 million, better than the expected 5.82 million.

Investors appeared to be buying after last week’s drop even before data showed the economy continues to rebound. Last week, market volatility rose 20%, marking the seventh such rise since March 2020, according to Instinet. The market calmed down after each of the first six spikes in volatility, and most of the time, the S&P 500 rose over the following weeks.

“’Buy Trough’ has supported the market throughout the year and appears to be alive and well,” writes JJ Kinahan, chief market strategist at TD Ameritrade.

One belief that gives investors confidence in stocks is that the impact of the Delta variant on the economy may be temporary. “While supply side constraints may dampen production in the short run, some of it will be recouped in the form of stronger growth later (potentially in 2022) as growers seek to satisfy arrears and to replenish inventory, ”writes Hollenhorst.

The action in the stock market also confirmed a degree of economic optimism. Stocks whose earnings streams are very sensitive to economic demand, such as commodity producers, have performed well. The Energy Select Sector SPDR exchange-traded fund (XLE) rose 3.8% as the price of crude oil rose 5.3% to $ 65.46 per barrel. The SPDR S&P Metals & Mining ETF (XME) gained 3.7% as the price of copper rose 2.1% to $ 4.22 a pound.

Jackson Hole, which was intended as a face-to-face event but has been turned into a virtual conference for the second year in a row, begins Thursday.

Federal Reserve Chairman Jerome Powell is due to speak on Friday. Investors will be watching her words closely on when and how the Fed intends to start cutting back on asset purchases it has used to support the economy during the pandemic.

Speculation to cut or taper buying has swayed investor sentiment in recent weeks, especially following the July meeting of the Federal Open Market Committee, the Fed’s monetary policy body.

“It is unlikely that Powell will effectively preempt this [tapering] decision Friday and he will rather wait until September to give a more substantial signal, ”writes James McCann, deputy chief economist at Aberdeen Standard Investments.

It is likely that comments made at the Jackson Hole meeting will indicate that the Delta variant has dissuaded the Fed from reducing its support for the economy, for now, writes Tom Digaloma of Seaport Global Securities.

Others agree that the tapering may have to wait until the current economic headwinds subside. “Making things even more difficult to understand, the speech comes as the Delta variant of Covid creates new uncertainty in the United States and abroad,” Kinahan writes.

Crypto assets have also received a boost.

Bitcoin

prices briefly traded above the $ 50,000 milestone on Sunday night. It was the first time the cryptocurrency has broken above this level since a crash in May.

Pfizer

(PFE) gained 2.4% as the Food and Drug Administration fully approved its Covid-19 vaccine. The vaccine had received emergency use authorization in 2020.

AMC Entertainment (AMC) increased 6.8. It was the trending name on StockTwits, a website that tracks company mentions on Reddit.

PayPal (PYPL) stock rose 1.5% following the announcement that the company will allow UK customers to buy and sell cryptocurrencies.

JD.Com (JD) stock rose 3.3%. The company reported higher-than-expected results for sales and earnings per share.

Write to Jack Denton at [email protected]


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