Why Fed chief Powell’s rate cut signal lifted our non-tech stocks the most
It was a topsy-turvy week for Wall Street, saved by a big Friday rally. The market was looking at a weekly loss at Thursday’s close. But a day later, Federal Reserve Chairman Jerome Powell came through, hinting at possible interest rate cuts ahead. His speech on Friday at the central bank’s economic symposium in Jackson Hole, Wyoming, was just what investors had hoped to hear, and the stocks that can benefit the most led the market. The cyclical, more economically sensitive names were strong with DuPont and Home Depot among the winners Friday and for the week. Defensive groups lagged, which put Bristol Myers Squibb and Costco in the red for the session and the week. While lower rates lift all boats, some of our big tech stocks finished up only slightly Friday but down for the week. Why? Well, the number of rate cuts this year won’t impact names like Meta Platforms or a Microsoft quite as much. Instead, their fortunes are more tied to the boom in artificial intelligence rather than lower borrowing costs. The Dow Jones Industrial Average hit a new all-time high Friday, closing at a record and exceeding its previous record close from early December. The S & P 500 and Nasdaq Composite rallied on Friday too, but it was not enough to eclipse last week’s milestones. While the Dow and S & P 500 both advanced overall this week, the tech-heavy Nasdaq posted a weekly loss. “In the end, Powell managed to thread the needle perfectly and, as a result, all three major averages are rallying,” Zev Fima, a portfolio analyst for the CNBC Investing Club, wrote in a Friday analysis. “When we look underneath the hood of the S & P 500, the leading sector is consumer discretionary — and that makes sense because lower rates mean more money discretionary money in consumers’ pockets.” It was a big week for Disney as well. The company finally launched its new ESPN flagship streaming app Thursday, allowing the sports channel to become a standalone streaming service. The product was designed to expand access for existing subscribers and sports fans outside of the traditional streaming bundle to all of ESPN’s content. “We think this will contribute nicely to ESPN’s bottom line over time as engagement grows,” Disney CEO Bob Iger told CNBC on Thursday. Some on Wall Street, however, were concerned when management said that Disney would not break out subscriber numbers for the new ESPN offering. After all, many people view them as a key metric to evaluating the success of streaming platforms. But Iger said that subscriber figures are “irrelevant,” and that Disney is taking more of an “agnostic” strategy instead. “We don’t feel like the way to measure this is immediate, nor do we feel like the way to measure this is in just subscribers,” the CEO added. Three Club names reported quarterly earnings this week. On Monday evening, Palo Alto Networks posted a better-than-expected quarter and issued upside guidance for fiscal year 2026. The cybersecurity company beat estimates…
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