NEW YORK (AFP) – Wall Street equities finished with solid gains on Thursday (Aug 25), boosted by upbeat economic data and despite more Federal Reserve officials repeating the message that interest rates will continue to rise to combat inflation.
Shares opened higher and remained in the green throughout the trading session, as the Dow Jones Industrial Average gained 1 per cent to finish the day at 33,291.78.
The broad-based S&P 500 jumped 1.4 per cent to close at 4,199.52, while the tech-rich Nasdaq Composite Index increased 1.7 per cent to 12,639.27.
Federal Reserve chairman Jerome Powell’s speech on Friday to the annual central banking symposium in Jackson Hole, Wyoming has been the focus of attention all week.
Nick Reece of Merk Investments said markets seem to have come around to the idea that Powell will stick to his guns on the inflation message.
“Powell probably isn’t going to say anything unexpected,” he told AFP, which means “the market can have a relief rally.”
He also noted the positive economic data as a factor in the day’s gains.
Government reports showed initial applications for unemployment benefits unexpectedly fell last week, dispelling concerns about a weakening job market, while GDP in the second quarter contracted by 0.6 per cent, much less than first reported.
Before Powell’s speech, markets on Friday will get a look at the Fed’s preferred inflation index, which like CPI is expected to show a dramatic slowdown in July due to falling gasoline prices.
But economists say Powell will reiterate that the Fed will keep raising interest rates until prices are trending decidedly lower.