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Stocks Drop After Stern Comments From Fed Chair, Jerome Powell
• US stocks fell Friday after stern remarks from Fed Chair Jerome Powell in Jackson Hole, Wyoming. In an extremely brief eight-minute speech, Powell reaffirmed his commitment to fighting inflation. He said the central bank will “use our tools forcefully” and noted that raising rates will cause "some pain" to the US economy, which weighed on Wall Street sentiment.
• Zooming out, the Fed isn't convinced yet that inflation has peaked. As a result, it doesn't see itself stopping its rate hikes anytime soon. Powell is cautious about halting interest-rate increases prematurely, saying, "We must keep at it until the job is done."
• In comparison to the downbeat remarks from Powell, one bright spot was the University of Michigan consumer sentiment index, which came in better than expected. The final August reading was 58.2, which handily beat projections of 55.3 and was higher than July's figure of 51.5.
What to Be on the Lookout for Today
• The Dallas Fed’s manufacturing index is due, which tracks productivity for the region. Besides that, it’s a relatively quiet day on the economic data front.
• Meanwhile, in corporate earnings, Gambling.com is scheduled to report. The company doesn’t operate gaming sites or apps but provides marketing services to sportsbooks and other firms. CEO Charles Gillespie recently predicted week one of the NFL season will set records in terms of bets placed.
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A Few Headlines That Should Be on Your Radar
In the week ahead, all eyes will be on the jobs market, while earnings reports focus on consumer spending. Speaking of consumer spending, Campbell Soup Company (CPB) will report earnings Thursday. Also, earlier this month the company unveiled a new product in partnership with Dunkin’ – pumpkin spice Goldfish grahams. Read more >> SpaceX and T-Mobile (TMUS) will partner to provide cell phone service by satellite. Musk asserts the initiative will put an end to dead-zones and extend connectivity to even the most remote locations. The service could solve a problem that has vexed consumers and cell phone carriers alike: how to attain or provide cost-effective coverage to sparsely populated areas. Read more >> Families will spend an average of $864 on back-to-school supplies this year. There are some ways to save, but the things you need to do before you buy – and when paying – may not be so obvious. The big picture is: don’t spend any more than you have to. Whether it’s a new outfit for picture day or some number two pencils, there are always ways to save. Read more >> Check lost in the mail? Learn how to protect yourself and your account in the event of a stolen check. While you may be writing fewer checks these days, it’s still important to track any checks you do write to be sure they were received and cashed. Read more >>Not-So-Breaking News
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Bed Bath & Beyond (BBBY) is planning to share a new strategy with investors this Wednesday. The home goods retailer is reportedly in talks with a lender to shore up its balance sheet amid slowing sales and dwindling cash reserves as it enters the holiday season.
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In an eleven-to-three vote, workers at a Chipotle Mexican Grill (CMG) in Lansing, Michigan, became the chain’s first location to favor unionization. Over the past 10 months, more than 200 US-based Starbucks (SBUX) cafes have voted to unionize.
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Gap (GPS) reported a surprise second quarter profit, however the retailer also warned of a somewhat lackluster near-term outlook. The company, which also owns the Old Navy and Banana Republic brands, blamed the cloudy guidance on excess inventories and downbeat demand.
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Ulta Beauty (ULTA) reported revenue figures that topped Wall Street expectations last week. Some analysts are betting on the beauty stock despite macroeconomic headwinds, saying it will continue to benefit as the pandemic subsides.
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VMware (VMW) saw its profit decline less than forecasts anticipated. Most of the focus is on Broadcom's (AVGO) intention to acquire VMware for $61 billion, which was announced in May. The company and its investors are now waiting on final approval.
Financial Planner Tip of the Day
"Traditional IRAs can help you lower your tax bill and are great for individuals who earn too much money to contribute directly to a Roth IRA. Higher-income earners might not get to deduct contributions from their taxes now, but they can take advantage of tax-deferred growth between now and retirement. An IRA can also be used for consolidating and rolling over 401(k) accounts from previous jobs."
Brian Walsh, CFP® at SoFi