This week (August 30 to September 3), the New York Stock Exchange (NYSE) is expected to continue its positive trend later last week, noting the announcement of the employment report in August.
However, the possibility of profit-taking sales cannot be ruled out as stock prices are hitting record highs.
“If the economy develops as widely as expected, it may be appropriate to start reducing the pace of asset purchases within this year,” Federal Reserve Chairman Jerome Powell said at the Jackson Hall symposium held last week.
In order to reduce the pace of asset purchases, “significant progress” must be made in prices and employment.
The Fed believes that significant progress has already been made in prices, but it believes that employment should wait and see.
“Additional progress has been made in the July employment report, but the delta mutation has also spread further,” Powell said after the meeting.
Employment in August is expected to be lower than the previous month. This was because the number of confirmed cases of COVID-19 increased rapidly due to the spread of delta mutations.
Economists expected the number of non-agricultural employees to rise by 750,000 in August, according to the Wall Street Journal. The figure is down from the previous record of 943,000. The unemployment rate is expected to fall from 5.4% to 5.2%.
On NYSE positive trend, the Standard & Poor’s 500 and Nasdaq hit record highs, while the Dow Jones 30 industrial average rose more than 200 points.
Powell said tapering is not a direct sign of a base rate hike, and diagnosed that there is a “long way to go” to achieve the “maximum employment” goal among the prerequisites for a rate hike.
Until now, the market has been concerned that if tapering starts within this year, the timing of the rate hike could be faster.
However, Powell drew the line, saying, “The timing or pace of the upcoming asset purchase reduction is not to send a direct signal regarding the rate hike.”
The 10-year government bond rate fell to 1.31 percent due to Powell’s remarks. Prior to Powell’s remarks, it was 1.36 percent nearby. Interest rates quickly exceeded 1.30% last week as Fed officials strengthened their tapering remarks within the year ahead of the Jackson Hall symposium, but the rise was greatly lowered again.
In addition to this week, the consumer confidence index of housing indicators and conference boards, including provisional housing sales, and the manufacturing and non-manufacturing PMI of the Supply Management Association (ISM) will be announced.
Economic indicators are showing some signs of slowing down in the third quarter. The indicators released this week are expected to gauge the extent to which the economy is affected by the re-proliferation of COVID-19.
The S&P 500 rose 1.52 percent last week, while the Dow Jones 30 industrial average rose 0.96 percent. The tech-heavy Nasdaq index rose 2.82 percent.