U.S. stocks climbed on Thursday, with the S&P 500 toppling another record, as investors embraced upbeat economic reports and looked to a dovish message from Federal Reserve Chair Janet Yellen when she talks about the labor market in Jackson Hole on Friday.
"Nothing is really trend changing; we're seeing positive economic data, as we have seen," Dave Roda, regional chief investment officer for Wells Fargo Private Bank, said of Thursday's economic reports, which cast better-than-expected lights on housing, jobs and factory activity.
Hormel Foods rallied after the maker of pork and turkey products reported third-quarter results that beat expectations. Bank of America gained after agreeing to pay $16.65 billion to halt federal and state probes into mortgage-bond sales. Shares of Dollar Tree declined as Family Dollar Stores reaffirmed its support for its buyout offer, rejecting a bid from Dollar General.
On Wednesday, U.S. stocks mostly advanced after minutes from the Fed's last meeting showed some Fed officials want a "relatively prompt" rate hike based on the economy's progress.
"Yesterday was a little surprising, especially in reaction to the release of the Fed minutes, which had a little bit of a hawkish overtone to them," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
Still, expectations of a "more dovish posture coming from Yellen" and a majority of the Federal Open Market Committee is holding sway with investors, said Luschini.
"In the end, Janet Yellen is the chair, and from the way she's voted in the past, and from the message that she's articulated, she wants broad-based strength in labor markets before moving to a higher-rate environment. We don't see the debate (within the FOMC) as changing the likely outcome," said Roda at Wells Fargo Private Bank.
"Everybody is focused on the nuance of Janet Yellen's speech tomorrow, which is on labor -- the one ingredient, maybe besides housing, that is keeping the Fed from raising rates sooner," said Roda, who added that a speech by European Central Bank President Mario Draghi could potentially be the more market-moving of the speeches at Jackson Hole.
"If you look at the economic data in Europe, they are rolling over. Given the data, and lack of inflation, the probability has increased" that of the euro zone doing a version of quantitative easing, said Rhoda.
While unlikely that Draghi would announce policy moves in Jackson Hole, "he may allude to perhaps the need for it, or give a light more insight. That could be market moving," Roda said.