Key points:

  • The U.S. stock market posted its biggest weekly gain this year.
  • Fed Chairman Jerome Powell’s speech at this symposium in Jackson Hole will be a key event for investors.
  • The Democratic National Convention could add to market volatility.

The US stock market started the week on a positive note, recording its largest weekly gain this year. Investors focused on two significant events: the Democratic National Convention and the upcoming Jackson Hole Economic Symposium.

At the end of the trading session, the Dow Jones Industrial Average rose by 0.58%, reaching 40,896.53 points. The S&P 500 also showed growth of 0.97%, closing at 5,608.25. The Nasdaq Composite ended trading with an increase of 1.39%, reaching 17,876.77 points.

Tech sector drives growth again

The technology sector, led by Nvidia, Microsoft and Alphabet, was the catalyst for gains in all three major U.S. stock indexes in the latest trading session. The S&P 500 and Nasdaq continued their upward trajectory, posting their eighth consecutive session of gains, the longest winning streak of the year. The rally follows a strong weekly rally earlier in the week, when all three major indexes posted significant gains of between 2.9% and 5.3%.

Advanced Micro Devices also saw positive momentum, rising 4.5% after the company announced plans to acquire server maker ZT Systems for $4.9 billion. The deal is aimed at expanding AMD’s AI portfolio and increasing competition with market leader Nvidia.

In the coming days, investors are expecting quarterly earnings reports from a number of major companies, including cybersecurity specialist Palo Alto Networks, retailer Target and home improvement chain Lowe’s. The release of these data will undoubtedly have a significant impact on market dynamics.

Traders’ attention focused on Powell’s upcoming speech

Recent economic data has shown consumer resilience despite slowing economic growth, raising expectations that the Federal Reserve will ease monetary policy soon. Markets are actively discussing the possibility of a 25 basis point rate cut as early as September.

“The current rally is driven by hopes for continued stimulus and a possible rate cut by the Fed in September,” said Paul Nolte, senior adviser at Murphy & Sylvest.

The annual Jackson Hole Symposium, which begins Thursday, will be a key event for investors. Particular attention will be paid to Fed Chairman Jerome Powell’s speech, where market participants are expecting additional signals about the central bank’s plans to move from a tight monetary policy to a more neutral one.

The Democratic National Convention, which starts on Monday, could add to market volatility, especially amid traditionally low trading volumes in late summer.

The CBOE Volatility Index, a gauge of investor anxiety, is showing a notable decline after hitting a four-year high, indicating growing optimism about a soft landing for the economy.

Investment bank Goldman Sachs has revised its forecasts down to 20%, cutting its 12-month recession odds from 25%. The move comes amid encouraging data on the labor market and retail sales.