Breakfast News: Markets Surge On Fed Hint

Breakfast News: Markets Surge On Fed Hint

1. Markets End Strongly on Rate-Cut Signs

Markets surged Friday, with the Dow Jones rising more than 800 points -- up 1.5% on the week -- to hit a new record close, as Federal Reserve Chair Jerome Powell signaled a softening of his stance on interest rates at Jackson Hole. Friday's gains reversed tech-led pressure, and the S&P 500 ended the week up 0.3%, with the Nasdaq recovering to just a 0.6% weekly drop.

• "When Fed chairs open the door for a rate cut, it's quite difficult to close": Ryan Sweet at Oxford Economics noted that Powell had clearly opened the door by saying, "The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance."
• "There is more caution than the markets are giving him credit for": Diane Swonk, chief economist at KPMG US, reminded us that the Fed is still concerned about inflation. The CME FedWatch tool has strengthened to an 87% chance of a September cut.

2. Fool Tech Favorites: NVDA, CRWD, SNOW

As Monday's Breakfast News brings you a look at the week ahead, second-quarter earnings from Nvidia (NVDA 1.56%) after Wednesday's close will be among the most hotly watched. Bullish analysts expect a 50% revenue jump year over year. Watch for possible updates on a feared $8 billion hit from Chinese export restrictions and on Nvidia's new Spectrum-XGS network technology.

• Currently ranked third across Fool services for its ability to beat the market over five years: CrowdStrike (CRWD 0.54%) also reports Q2 Wednesday afternoon, after Q1 disappointed on revenue and free cash flow. CFO Burt Podbere told us the company's new FalconFlex licensing program should help drive second-half growth.
• Rebounding 67% in 12 months after five-year fall: It's Q2 time for Snowflake (SNOW -0.23%) the same day, on the back of strong Q1 revenue and earnings beats, with guidance for similar growth this time as the cloud-based data specialist strengthens its artificial intelligence (AI)-based productivity tools.

3. Pick of the Week's Retail Earnings

Ulta Beauty (ULTA -0.82%) is part of Thursday's reporting lineup, as Wall Street expects a year-over-year earnings decline but higher revenue. Investors will want to know how the ending of a partnership with Target (TGT -1.57%) might affect future guidance.

• General retail picture: Best Buy (BBY -1.82%) and Dollar General (DG -0.99%) are set to report Thursday. Tariff uncertainty still clouds the outlook for Best Buy, while Dollar General should reflect how inflation is affecting budget‐conscious consumers.
• Up 388% in five years: Dick's Sporting Goods (DKS -0.01%) reported its fifth consecutive quarter of over 4% comparable sales growth in Q1, as demand for sporting and active lifestyle products bucks inflationary pressure. Watch for news of the Foot Locker (FL -0.34%) acquisition with Thursday's Q2 results.

4. Inflation in Clearer Focus

The July Personal Consumption Expenditures (PCE) index print is due Friday. Forecasts suggest a year-over-year uptick for Core PCE -- the Fed's favorite inflation measure, giving a better guide to underlying inflation -- to 2.9% from June's 2.8%. It would be the highest annual rise since February.

• "We ultimately expect core PCE inflation to peak slightly above 3% by the end of the year": Wells Fargo (WFC 0.96%) analysts added, "The Federal Reserve faces difficult trade-offs in balancing its dual mandate".
• "If PCE, particularly goods prices, comes in above expectations, that could put the Fed in a tight spot": The Financial Times highlights the Fed's dilemma, with the focus set to turn to employment figures due the following Friday.

5. Your Take

On Friday's episode of the Motley Fool Money podcast, the hosts played a game of "Would You Rather" -- now it's over to you! Which one of Meta Platforms (META -0.08%) and Alphabet (GOOG 1.71%) would you rather have in your portfolio and why? Debate with friends and family, or become a member to hear what your fellow Fools are saying.