US Stock Market Overview – Stocks Rise Led by Financials as Yields Moved Higher

US stocks moved higher on Thursday, as the Fed announced they would keep interest rates lower for longer. The Dow led stocks higher, while the Nasdaq trailed. The S&P 500 index notched up a fresh all-time high. Most sectors in the S&P 500 index were higher led by financials, Technology shares bucked the trend. US jobless claims came in higher than expected remaining above 1-million while continuing claims fell to 14.5 million. The Trump administration announced that they would order 150-million new quick COVID tests from Abbot Labs, helping to send the stock higher. Walmart announced they were joining a bid with Microsoft to purchase TikTok. The VIX volatilty index rose and closed above 24 for the first time in 3-weeks.

Fed Changes Policy to Keep Rates Lower for Longer

Federal Reserve Chair Jerome Powell announced a major policy shift were the central bank will allow inflation to run hotter than normal to support the labor market and broader economy. The announcement came at the virtual Jackson Hole symposium. The move was called a robust updating of the Fed policy. The goal of the Fed is to drive core inflation to 2%. This would mean that the Fed would allow inflation to run slightly hotter than normal without putting the brakes on. The changes were codified in a policy blueprint called the “Statement on Longer-Run Goals and Monetary Policy Strategy,” first adopted in 2012.

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US Jobless claims increased by just over 1 million for the week ending August 22, down from 1.104 million in the previous week. Expectations were for initial jobless claims to come in right at 1 million. Continuing claims,  which account for those receiving unemployment benefits for at least two straight weeks, fell by 223,000 to 14.535 million for the week ending August 15.