After a lot of hype, speeches by Federal Reserve Board Chair Janet Yellen and ECB chief Mario Draghi ended up being rather anticlimactic. Neither really touched on monetary policy, leaving trading on Wall Street listless.
Balance sheet normalization remains on track for the September meeting while inflation moving back towards 2% seems the determinant for a December rate hike. The ECB, for its part, is expected to make a decision on QE tapering at its October meeting.
In the end, the Dow Jones Industrial Average gained 0.1%, the S&P 500 wafted up 0.2%, the Nasdaq Composite lost 0.1% and the Russell 2000 finished the day up 0.3%. Treasury bonds strengthened, the dollar weakened, gold rose 0.5%, and crude oil gained 0.9% as Hurricane Harvey approaches the Texas coastline.
Breadth was positive, with advancers outpacing decliners 2.1 to 1. Trading activity was light, at just 84% of the NYSE’s 30-day average. Defensive telecom stocks led the way with a 0.8% gain while healthcare was the laggard, down 0.8%. VMware, Inc. (NYSE:VMW) gained 1.9% on in-line results on an 18% rise in billings growth.
GameStop Corp. (NYSE:GME) fell 10.9% after reporting an earnings miss amid analyst caution over used game sales. Twitter Inc (NYSE:TWTR) fell 1.4% on a downgrade from hold at Jefferies citing better plays elsewhere in the social space.
Conclusion
If today felt listless, next week is likely to be even more drool inducing: The last week in August is historically one of the slowest as last-minute vacations are squeezed in before children go back to school.
The focus will nonetheless be on the odds of success for possible legislative action on tax reform. White House National Economic Director Gary Cohn told the Financial Times that President Trump would step up his tax reform push next week.
Also keep an eye on Friday’s nonfarm payrolls report, which will be the last read on the jobs market before the Fed possibly starts the process of pulling back its bloated $4.4 trillion balance sheet.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
Anthony Mirhaydari is the founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
