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On August 26, IMF Managing Director Kristalina Georgieva urged governments to address rising fiscal risks, stating that "all countries need to address their own fiscal problems and develop and publish credible plans to ensure debt and deficits are on a sustainable track." She also called on central banks to "focus heavily on their price stability mandate." Georgieva noted that the global economy is under pressure from high inflation and trade tensions, but growth from AI investment has partially offset the shocks. However, rising bond yields and stalled inflation indicate a high degree of uncertainty about the economic outlook. She stated that the energy shock triggered by the Iran war is not yet over, and the global economy is facing a tug-of-war between "negative supply shocks from the Middle East" and "positive demand shocks from AI." She also warned that energy supply, El Niño weather, and the impact of AI on financial stability remain major risks.British Chancellor of the Exchequer: Supports US efforts to promote a diplomatic solution and welcomes increased pressure on Iran through means such as "economic isolation".British Chancellor of the Exchequer: (Regarding sanctions against Iran) He called on Iran to cease its disruptive activities in the region, including the Strait of Hormuz.On August 26th, the minutes of the Federal Reserves July discount rate meeting revealed that 10 regional Federal Reserve banks requested that the current main lending rate be maintained, while 2 regional Federal Reserve banks requested an interest rate hike. The Cleveland Fed and the Minneapolis Fed had voted to raise the main lending rate from 3.75% to 4%. The minutes show that the Federal Reserve Board ultimately approved maintaining the main lending rate at 3.75% and continuing to use the formula for calculating subprime and seasonal lending rates. Several Fed directors stated that the overall economic situation was stable, but some directors mentioned that inflation remained high, consumers were increasingly focused on prices, and fuel prices and surcharges were driven up by global events.According to Nikkei: Japan is seeking to fund the rare earth mining industry with long-term technological support.

Nasdaq Surges 2.7% As Strong Earnings/US Data Boost Growth Stocks; PayPal Gains 9.0%

Cory Russell

Aug 04, 2022 14:58

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Nasdaq 100, S&P 500 Break Higher Despite Strong Earnings, Strong US Data, and Fed Remarks

The US ISM Services PMI data for July and Factory Orders statistics for June sparked confidence that the US economy is, for the time being, not in recession, and on a bombardment of positive earnings reports, the S&P 500 and Nasdaq 100 indexes burst out to new multi-week highs on Wednesday.


Stocks also took solace from comments made by Fed policymaker Mary Daly, who downplayed the possibility of a further 75 basis point rate hike from the Fed in September. However, she also pushed back (as have other Fed policymakers in the last two days) against overly pessimistic market expectations for the Fed to start reducing interest rates in early 2023.


The S&P 500 index rose 1.6 percent to break over 4,150 for the first time since early June and leave its 100-Day Moving Average, which is located just around 4,120, in the dust. This was a bullish combination for stocks. Bulls are still aiming for a challenge of the highs from early June at 4,180.


While the Dow climbed 1.3 percent to cross back above its 100DMA just over 32,700, the Nasdaq 100 index rose 2.7 percent to reach its highest level since early May in the 13,200s.

Big Tech and Growth Stocks are the Best

The market gain on Wednesday was driven by "growth" firms, including some of the biggest names like Apple, Microsoft, Alphabet, Amazon, and Meta Platforms. The chief investment officer of Bokeh Capital Management, Kim Forrest, advised investors to switch from value equities to growth ones if the economy were not now in recession but neither blazing upward either.


Gains in growth stocks were aided by a nearly 10% increase in PayPal Holding's share price after the payment technology company raised its annual profit projection and reported that activist investor Elliot Management had amassed a $2 billion holding. The S&P 500 GICS sectors with the highest concentration of growth companies, Information Technology, Communication Services, and Consumer Discretionary, all increased by 2.5 percent to 3.0 percent on Wednesday.


Other significant companies that have reported earnings include Starbucks, which rallied after exceeding bottom-line analyst expectations in Q2 amid strong demand for its coffee in the US, CVS Health, the largest US pharmaceutical chain, and Moderna, which jumped after announcing a $3 billion share repurchase program.

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