Former St. Louis Fed Pres. Bullard: The policy rate is 'a little bit high' for the situation
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Insider
3 hours ago
- Business Insider
The Week That Was, The Week Ahead: Macro & Markets, August 17, 2025
Everything to Know about Macro and Markets Stocks ended the week on a soft note, still managing to lock in back-to-back weekly gains. The S&P 500 (SPX) rose 0.94% for the week, and the Nasdaq-100 (NDX) inched up 0.43%. The Dow Jones Industrial Average (DJIA) was the standout, delivering a weekly gain of 1.74%. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. A Week of Contrasts After a red Monday, all three major indexes reached all-time highs on Tuesday. This followed in-line CPI data, which bolstered bets that the Fed would deliver its first rate cut of 2025 in September – traders have priced in nearly a 100% chance of a 25-bps easing. Stocks extended gains on Wednesday: the S&P 500 and Nasdaq hit new ATHs again amid remarks from Treasury Secretary Scott Bessent urging a 50-bps cut based on downward revisions in payroll data. Wall Street analysts began forecasting up to three cuts this year, citing a softer labor market, limited tariff pass-through to consumer prices, and the appointment of Trump's temporary Fed board pick. But those forecasts were questioned Thursday when PPI, which tracks wholesale price trends, came in hotter than expected, denting sentiment and clouding the Fed outlook. Other economic reports pulled markets in opposing directions: July's industrial production was lackluster – although not recession-bellwether weak – while retail sales beat forecasts, underscoring resilient consumer demand despite high borrowing costs. Meanwhile, the UoM consumer sentiment unexpectedly slipped and inflation expectations rose, muddying the outlook for Fed cuts in September. On Friday, the Dow's gains were dominated by UnitedHealth's surge following Berkshire Hathaway's disclosure of a large stake in the embattled healthcare giant. Meanwhile, the S&P 500 and Nasdaq's advances were tempered by tech weakness amid cautious corporate outlooks and persistent tariff concerns, particularly in semiconductors. This week featured leadership rotation: healthcare and small-caps rose, while semiconductors and tech lagged under the weight of inflation and trade worries. With mixed inflation and consumer data re-injecting uncertainty into the Fed policy outlook, all eyes now turn to Jackson Hole. Jerome Powell's speech on August 22 is the marquee event, expected to instantly influence markets. A dovish tone could broaden the rally, boosting small caps, rate-sensitive areas, and tech. A hawkish stance – highlighting inflation risks or caution – could trigger sharp corrections and volatility, especially in growth and rate-sensitive sectors. Adaptability, Profitability, and Capex Economic data remains mixed – but corporate signals are broadly bullish, despite overbought pockets and uneven strength. As Benjamin Graham famously said, 'in the short run, the market is a voting machine but in the long run, it is a weighing machine.' Prices may swing on sentiment or episodic events, but over time, earnings growth is what ultimately matters. On that front, Q2 2025 earnings have been compelling: over 90% of companies have reported, with average EPS growth near 11% year-over-year – versus expectations of 3-4% at the quarter's start. This follows a similar pattern seen in Q1 season. In the second quarter, 84% beat expectations, surprising by an average of 9%. U.S. companies' adaptability – particularly in counteracting tariff shocks – is helping shield both the economy and equity markets. Notably, S&P 500 forward 12-month EPS estimates are now at record highs, driven largely by tech megacap profitability and reinvestment. AI capex alone has contributed more to GDP growth in H1 2025 than consumer spending. While over the long term, consumer demand has been the undisputed engine of growth – megacaps' AI and cloud investment plans signal continued acceleration of their role in fueling the expansion. The sterling Q2 earning-growth results have broadly dispelled investor fears over trade policies weighing on the economy and corporate performance. FactSet reports that 'recession' mentions in earnings calls dropped nearly 70% from Q1 2025, hitting their lowest levels since 2005. Polymarket's 2025 recession odds plunged from over 65% in May to 12%, signaling there's no longer a belief that levies on imports mean a recession is imminent. Tariffs still get airtime, even if much less than in Q1 – but the C-suite and market participants now see them as manageable. Factors such as lower energy prices and decelerating housing-related inflation are further diluting the tariff impact. Strategists now expect any tariff impact on inflation to be delayed and muted, with economic growth holding relatively firm. Stocks That Made the News ▣ UnitedHealth (UNH) soared over 22% on the week after Berkshire Hathaway ($BRK.B) disclosed a new stake in the beaten-down healthcare provider. Warren Buffett's conglomerate acquired 5.04 million UNH shares valued at $1.57 billion. ▣ Applied Materials (AMAT) plunged 13% despite delivering record performance last quarter, as the chip equipment provider offered weaker-than-expected guidance amid weak China demand, stalled export license approvals, and uneven orders. Despite the near-term challenges, the company remains optimistic about mid-single-digit growth for fiscal 2025, driven by investments in U.S. manufacturing and advancements in semiconductor technology. ▣ Intel (INTC) was on the winning side of the semi trade, popping by over 22% on the week following reports that the Trump administration was mulling the potential for the government to take a stake in the embattled company to aid domestic chip manufacturing expansion. ▣ Palantir Technologies (PLTR) declined after Andrew Left, head of short-selling firm Citron Research, said he was betting against the company in light of its lofty valuation, which he called 'absurd.' ▣ Amazon (AMZN) rallied as analysts applauded analysts applauding its expansion into free same-day grocery delivery nationwide for Prime members. Evercore ISI said that this expansion deepens Amazon's customer engagement by strengthening a high-frequency purchase category into the Prime ecosystem, increasing stickiness and customer lifetime value. ▣ Oracle (ORCL) also bucked the down trend on Friday, rallying on news of expanded partnership with Alphabet's (GOOGL) Google Cloud. Under the collaboration, Oracle will integrate Google's Gemini AI models into Oracle Cloud Infrastructure (OCI). This allows Oracle's enterprise customers to access Google's Gemini AI capabilities – including multimodal understanding, coding assistance, and workflow automation – via OCI services, enhancing productivity and workflow automation. The deal – similar to one that Oracle struck with Elon Musk's xAI back in June – is expected to significantly broaden Oracle's AI offerings, advancing its strategy of offering a menu of AI options rather than trying to push its own technology exclusively. The Q2 2025 earnings season is winding down, but several notable releases are still scheduled for this week. These include: Palo Alto Networks (PANW), Home Depot (HD), Medtronic (MDT), Keysight Technologies (KEYS), TJX Companies (TJX), Lowe's (LOW), Analog Devices (ADI), Target (TGT), Walmart (WMT), Intuit (INTU), Workday (WDAY), and Ross Stores (ROST).
Business Insider
3 hours ago
- Business Insider
3 Economic Reports That Could Affect Your Portfolio This Week, August 18-22, 2025
Stocks ended the week on a soft note, still managing to lock in back-to-back weekly gains. The S&P 500 (SPX) rose 0.94% for the week, and the Nasdaq-100 (NDX) inched up 0.43%. The Dow Jones Industrial Average (DJIA) was the standout, delivering a weekly gain of 1.74%. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. After a red Monday, all three major indexes reached all-time highs on Tuesday. This followed in-line CPI data, which bolstered bets that the Fed would deliver its first rate cut of 2025 in September – traders have priced in nearly a 100% chance of a 25-bps easing. Stocks extended gains on Wednesday: the S&P 500 and Nasdaq hit new ATHs again amid remarks from Treasury Secretary Scott Bessent urging a 50-bps cut based on downward revisions in payroll data. Wall Street analysts began forecasting up to three cuts this year, citing a softer labor market, limited tariff pass-through to consumers, and the appointment of Trump's temporary Fed board pick. But those forecasts were questioned Thursday when PPI, which tracks wholesale price trends, came in hotter than expected, denting sentiment and clouding the Fed outlook. Other economic reports pulled markets in opposing directions: July's industrial production was lackluster – although not recession-bellwether weak – while retail sales beat forecasts, underscoring resilient consumer demand despite high borrowing costs. Meanwhile, the UoM consumer sentiment unexpectedly slipped and inflation expectations rose, muddying the outlook for Fed cuts in September. With mixed inflation and consumer data re-injecting uncertainty into the Fed policy outlook, all eyes now turn to Jackson Hole for the annual confab. Jerome Powell's speech on August 22 is the marquee event, expected to instantly influence markets. A dovish tone could broaden the rally, boosting small caps, rate-sensitive areas, and tech. A hawkish stance – highlighting inflation risks or caution – could trigger sharp corrections and volatility, especially in growth and rate-sensitive sectors. Three Economic Reports Here are three key economic reports that could affect your portfolio this week, in addition to the widely anticipated speech by Jerome Powell at the Jackson Hole Economic Policy Symposium. For a full listing of additional economic reports, check out the TipRanks Economic Calendar. » August Philadelphia Fed Manufacturing Survey – Thursday, 8/21 – This report measures manufacturing conditions in the survey area (Philadelphia, New Jersey, and Delaware) and is considered an accurate leading indicator for two nationwide reports: the Manufacturing PMI and ISM Manufacturing Index. » August S&P Global Manufacturing PMI and Services PMI (preliminary readings) – Friday, 8/22 – PMI indices are leading economic indicators used by economists and analysts to gain timely insights into changing conditions, as the direction and rate of change in PMIs usually precede shifts in the broader economy. » July Existing Home Sales – Friday, 8/22 – This report tracks sales volumes and prices of existing single-family homes, condos, and co-ops nationwide. Existing homes account for over 90% of total U.S. home sales, making this a key measure of housing market health and its influence on overall economic activity.
Yahoo
9 hours ago
- Yahoo
The Fed is expected to cut rates. Don't expect mortgage rates to follow.
A funny thing happened when the Federal Reserve began cutting interest rates last fall: Mortgage rates actually rose. Now, the central bank is gearing up to cut benchmark interest rates again, and there's a chance something similar could happen once more. The reason? Today's mortgage rates already reflect expectations about the Fed's next move: This week, they hit 6.58%, the lowest level since October 2024. Shop Top Mortgage Rates A quicker path to financial freedom Personalized rates in minutes Your Path to Homeownership A number of economic data releases between now and the Sept. 16-17 meeting could lead to rate swings in the coming weeks. The relationship between the Fed's rate cuts and mortgage rates isn't direct, and mortgage rates are sensitive to a number of other factors, most notably bond yields. Read more: How does the Fed rate decision affect mortgage rates? For mortgage industry professionals, moments like this can be a frustrating time to be in business. Mortgage rates stayed stuck in the high 6% area for most of this year, stymying affordability-stretched buyers and keeping refinancing action limited. Now that rates are finally moving lower, they're fielding more calls from prospective clients. But many customers say they want to wait until September to move forward, in hopes that rates will drop further. 'Oh my gosh, it's my least favorite thing to hear,' said Taylor Sherman, a mortgage loan originator at Barrett Financial Group in Tucson, Ariz. 'I'm like, 'Well, you know, that's already priced in.' Yes, Fed policy determines rates, but it's really about how the market views Fed policy.' When the Fed cuts interest rates, rates on debt tied to the prime rate, like home equity lines of credit and credit cards, typically drop soon after. But the rates on standard 30-year fixed mortgages aren't linked to prime, and often don't react much. Sometimes, like last year, mortgage rates even move higher. Mortgage rates are influenced primarily by 10-year Treasury yields, which move in response to a range of factors like market expectations about inflation, future government borrowing, and what the Fed is doing. Mortgage spreads — the difference between the 10-year yield and prevailing mortgage rates — also play an important role in rates and vary based on other factors like market volatility and demand for mortgage bonds. Read more: What is the 10-year Treasury note, and how does it affect your finances? According to CME FedWatch, traders currently see an 85% chance of a rate cut in September. Those odds are essentially baked into today's mortgage rates, but rates could still oscillate between now and then for a number of reasons. Before the Fed acts, new economic data on August hiring and producer and consumer inflation will be released. Earlier this month, weak jobs data in particular helped push mortgage rates to their current year-to-date lows. Right now, a buyer with $3,000 a month to spend on their home has around $20,000 more in purchasing power than they did in May, when mortgage rates hit their recent peak of just over 7%, according to Redfin. The brokerage's head of economics research, Chen Zhao, said in a statement that homebuyers waiting on the Fed before starting their search might be too late, especially as interest rate volatility is expected to kick up in the coming weeks as new data comes out. Read more: Will mortgage rates ever be 3% again? Bogdan Toderut, a loan officer with Summit Funding in Cumming, Ga., is monitoring inflation and hiring data as he tries to figure out where mortgage rates go from here. 'A lot of times, the market prices in expectations,' Toderut said. 'When you see the big changes, you see them when expectations weren't met.' Although he thinks some of his investor clients might be better off trying to time the market, he advises most buyers to consider overall affordability and their monthly payments over the minutiae of small rate moves. Sign up for the Mind Your Money weekly newsletter By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy After all, mortgage rates can change quickly and unpredictably. When rates hit 6.2% last September, Arkansas-based loan officer Amber Moser prepared refinancing quotes for several dozen clients. None of those deals went forward because the homeowners were holding out for lower rates that never came. Ultimately, they missed out on savings that could have amounted to $300 or $400 a month. Moser, who works for Gershman Mortgage, said she makes a point to educate prospective clients on how mortgage rates are market-driven and move before milestones like Fed cuts. But she, too, warns them that rates are ultimately unpredictable. 'There's no crystal ball, and we have no idea what's going to happen,' Moser said. 'The best bet is, don't try to time the market.' Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance. Sign up for the Mind Your Money newsletter Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
