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- Federal Reserve Chairman Jerome Powell signaled in Jackson Hole that an interest rate cut is imminent.
- Most of the market expects a 25 basis point rate cut, but a third of the market says Powell will start by cutting rates by 50 basis points.
- Powell says the labor market is no longer a source of inflation.
- Goldman Sachs stock is approaching an all-time high of $517.26, but there are plenty of entry points.
Goldman Sachs (GS) rose alongside U.S. indices on Friday after the market took a Federal Reserve Fed Chair Jerome Powell’s words to the heart about cutting interest rates at the September 18 meeting.
Shares of the venerable investment bank rose about 3% to a day high of $512.44 just before lunch.
The Dow Jones Industrial Average, of which Goldman Sachs is a major member, rose half a percentage point, and the Nasdaq and S&P 500 posted similar gains.
Dow Jones jumps after Fed agrees to cut interest rates
Jackson Hole, Powell Conference Lift Market
firm news But on days like Friday, when markets gained more certainty that rates would be up in less than a month, the anticipation was already there, but Powell’s direct talk reinforced existing sentiment.
CME Group’s FedWatch tool puts the odds of a 25 basis point rate cut at the September meeting at 66%, and a 50 basis point rate cut at 34%.
“The time has come to adjust policy,” Powell told a packed audience at the Jackson Hole Economic Symposium in Wyoming. “The direction is clear, and the timing and pace of rate cuts will depend on incoming data, evolving expectations, and the balance of risks.”
Charlie Ripley of Allianz focused on Powell’s view that the labor market is unlikely to be a source of inflation in the medium term.
While the pace and volume [of the cuts] “It has yet to be determined, but it has become very clear that the shift in focus has moved toward the labor market and the broader trajectory of the U.S. economy,” Ripley wrote in a note to a client.
Not much has been happening in the headlines for Goldman this week other than the minor embarrassment that Ken Griffin’s hedge fund Citadel has been given by the bank’s chief technology officer. Ateh Lahtiranta has been with Goldman since 2019 and will now be Citadel’s chief risk and algorithmic trading officer.
Dow Jones Frequently Asked Questions
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, consists of the 30 most actively traded stocks in the United States. The index is weighted by price rather than market capitalization. It is calculated by adding the prices of the component stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded The Wall Street Journal. In later years, it has been criticized for not being broadly representative enough because it tracks only 30 conglomerates, unlike broader indices such as the Standard & Poor’s 500.
There are many different factors that influence the Dow Jones Industrial Average. The overall performance of the companies that make up the index as reflected in their quarterly earnings reports is the main factor. U.S. and global macroeconomic data also contribute to investor sentiment. The level of interest rates, set by the Federal Reserve, also affects the Dow Jones Industrial Average because it affects the cost of credit, which many companies rely heavily on. Therefore, inflation can be a major driver in addition to other metrics that influence the Fed’s decisions.
Dow Theory is a method for determining the primary trend of the stock market developed by Charles Dow. One of the main steps is to compare the trend of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where they are both moving in the same direction. Volume is a confirmatory criterion. The theory uses elements of peak and trough analysis. Dow Theory assumes three phases of a trend: accumulation, when the smart money starts buying or selling; general participation, when the broader public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the Dow Jones Industrial Average. One is to use exchange-traded funds (ETFs) that allow investors to trade the Dow Jones Industrial Average as a single security, rather than having to buy shares in all the companies that make up the index. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). Dow Jones Industrial Average futures contracts allow traders to speculate on the future value of the index, and options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds allow investors to buy a share of a diversified portfolio of Dow Jones Industrial Average stocks, thereby providing exposure to the overall index.
Goldman Sachs Stock Chart
Goldman Sachs stock has already risen about 31% this year, so most traders will want to wait for a pullback before going long. Of course, if Goldman Sachs stock stock If the stock price goes above $517.26, the high it hit on July 31, it will lose its opportunity.
The main points of interest for bulls are the 50-day simple moving average (SMA), which is hovering around $480. Below that is the previous resistance level at $471 from May and the summer support level at $440 which held strong in both June and early August.
Goldman Sachs Daily Stock Chart
