Nasdaq Index, Dow Jones, S&P 500 News: Slowing US Economy Boosts Hopes for Rate Hike Pause

Wall Street’s Three-Day Winning Streak

The markets seem to be extending their winning streak with the Dow Jones Industrial Average pushing up by 154 points, while the S&P 500 and the Nasdaq Composite both recorded a 0.4% increase. Notably, the S&P’s rise was partly driven by Insulet, following the news of its chief executive, James Hollingshead, boosting his shareholdings in the firm by 19.4%. However, Hewlett-Packard saw a drop of 10% post its recent quarterly results which showed a revenue shortfall.

Economic Data and Stocks

Recent disappointing payroll data suggests private employers could only muster 177,000 new jobs in August, a significant drop from July’s revised 371,000 and below the Dow Jones’ 200,000 estimate. Yet, traders seem to be interpreting this lackluster economic performance positively, indicating a potentially favorable environment for stocks. Quincy Krosby of LPL Financial noted the market’s anticipation for continuity in this trend as we step into September.

Federal Reserve’s Anticipated Policy Shift

Following Tuesday’s release of less than stellar consumer confidence data and a surprising dip in U.S. job openings for July, there’s a growing sentiment that the Federal Reserve may soon adjust its policy stance. Carson Group’s Sonu Varghese encapsulated this sentiment, pointing out that softer economic data might reduce upward yield pressure, thereby benefiting equities. However, with just two trading days left for August, the major indexes still seem to be heading for monthly losses.

Short-Term Outlook

Despite the market’s recent gains, potential challenges lie ahead. The ADP’s recent report indicates slowing job growth, and a revision in the second-quarter GDP growth shows a decrease from 2.4% to 2.1%. As these economic indicators unfold, the market sentiment leans more bearish for the short term.