St. Louis Fed President James Bullard said on "Closing Bell" that the recession in the United States lasted just two months but that the Fed would maintain its accommodative stance as the recovery continues.
"I don't really think this is about monetary policy. This is about the virus, and the economy adapting to the virus, the risk management around the virus and the contagion that would otherwise occur," Bullard said. "I think our monetary policy is just right for this situation. We have a low policy rate, and we're going to stay low for a long time." — Jesse Pound
The market ended the record-breaking week on a high note as all three major stock indexes post solid gains in Friday's trading. The Dow gained 160 points and completely wiped out its 2020 losses. The 30-stock average is now up 0.4% for the year. The S&P 500 rose 0.6% to post its fifth straight positive week, also its longest weekly winning streak this year. The broad equity benchmark has also risen 7.2% this month, on pace to post its best August since 1984. The tech-heavy Nasdaq climbed 0.6%.— Yun Li
With less than an hour left in Friday's trading, major equity benchmarks were all in the green and on track to post solid weekly gains. The S&P 500 rose 0.4%, bringing this week's return to more than 3%. It will also mark its fifth straight week of gains and its longest weekly winning streak this year. The Dow gained about 200 points, turning positive for 2020. The Nasdaq was up about 0.4%, pushing its weekly gains to 3.2%.— Yun Li
Corporate debt defaults around the world have reached a four-year high, as energy companies, restaurants and consumer companies struggle to meet their obligations. S&P Global Ratings said the default total through Aug. 19 stood at 162, the highest since the 118 in 2016 but still trailing the record 212 in 2009 at the tail end of the financial crisis. The U.S. by far led, with 108 of the total, followed by Europe at 23 and emerging markets collectively with 22. Consumer services led with a default rate of 9% in July. Together, oil and gas, consumer, retail and restaurants and media/entertainment comprised 70% of the U.S. total and 64% of the global figure. The 12-month trailing default rate rose to 5.9% in July from 5.4% in June. — Jeff Cox
White House Chief of Staff Mark Meadows said Friday President Donald Trump is open to signing a $1.3 trillion coronavirus relief bill, a $300 billion bump from Senate Majority Leader Mitch McConnell's offer. Meadows told reporters that it was "number that's been offered in private," but House Speaker Nancy Pelosi has rejected it, sticking to her demand for a $2.2 trillion package. — Yun Li, Reuters
The second-quarter earnings season is winding down with 98% of the S&P 500 having reported results as of Friday. Companies overall had a low bar to hop over as analysts had dialed back their expectations due to the coronavirus impact. About 84% of S&P 500 companies have reported a positive earnings surprise for the second quarter, according to FactSet. It marks the highest percentage of S&P 500 companies with a profit beat since FactSet began tracking this metric in 2008. Meanwhile, S&P 500 earnings declined 31.8% for the quarter, the largest year-over-year decline since the first quarter of 2009, according to the data.— Yun Li
Tim Miller, co-portfolio manager of the small cap equity strategy at Scout Investments, said that the move by the Federal Reserve to allow inflation to run above its 2% target in the future should be bullish for small cap stocks. The central bank had struggled to bring inflation to the target level over the past decade but still raised interest rates when it felt the economy was strong. Fed Chair Jerome Powell said Thursday that the central bank will be okay with inflation overshooting the target for some period of time.
"That should benefit small cap and value stocks, which both tend to perform better in inflationary and rising rate environments. We might not see inflation for a while, but we know the markets trade on expectations, so that should favor small caps," Miller said. — Jesse Pound
The Dow traded about 100 points higher at midday, putting the 30-stock average on track to close higher for the year. The S&P 500 and Nasdaq, meanwhile, advanced 0.3% and 0.6%, respectively, as they headed for their fifth consecutive weekly gain. —Fred Imbert
Truist Securities raised its price target on Mastercard to a Street high of $415 from $375 and said the "digital shift (is) likely to yield benefits" as the coronavirus pandemic continues. "We believe Mastercard is taking share, a recent notable customer loss notwithstanding, owing to a superior value proposition," analyst Andrew Jeffrey said. "We also think Mastercard (and Visa) will emerge from pandemic in improved competitive positions, owing to learnings during this period of accelerated digital adoption." The firm also reiterated its buy rating on the stock. Shares of Mastercard are up 7% this week. - Michael Bloom
MGM Resorts shares jumped to a nearly 6% gain for the day after the casino and hotel operator notified 18,000 previously furloughed employees that their job losses are permanent as the company deals with the Covid-19 slowdown. "Nothing pains me more than delivering news like this," CEO Bill Hornbuckle wrote in a separation letter to the impacted employees. MGM's operations have been slammed by closures across the country but particularly in Las Vegas. — Jeff Cox
The market cap of U.S. tech stocks has surpassed that of the European stock market, according to Bank of America. The firm said in a note that U.S. tech now has a market cap of $9.1 trillion, while Europe was at $8.9 trillion even when including the United Kingdom and Switzerland. — Jesse Pound
Wells Fargo raised its price target on Chewy to a Street high of $70 from $60 and said the "(pet) shelter in place continues" ahead of the company's earnings report on September 10. "We expect strong quarterly results, given solid audience visitation metrics, strong net pet adoption/fostering trends, continued indications of digital strength among omnichannel retail peers, and evidence that CHWY is leaning back into paid marketing channels, which we believe could drive a modest acceleration in active customer growth," analyst Brian Fitzgerald said. The firm also reiterated its overweight rating. Shares were up 4% in early trading. - Michael Bloom
Philadelphia Fed President Patrick Harker said Friday that it will take a while before the U.S. sees jobless numbers return to pre-coronavirus lows.
"Right now, you're seeing some signs of recovery, but basically it's moving sideways," Harker said of the U.S. labor market. "We still have 27 million that are on some form of unemployment and we won't get fully back to the kind of employment —we had this great employment picture before the crisis — for quite a while."
Asked what level of inflation he'd be comfortable with, Harker explained that he thinks its pace is more important than the number to which it rises.
I'd be comfortable with inflation "somewhere north of 2%. But to me, it's not so much the number, whether it's 2.5% or 3%," he said. "It's whether it's reaching 2%, creeping up to 2.5% or shooting past 2.5%." — Thomas Franck
U.S. consumer sentiment rose slightly this month and topped economist expectations, but consumers remain concerned about the state of the economy as the coronavirus pandemic rages on. The University of Michigan's consumer sentiment index rose to 74.1 in August from 72.5 in July. Economists polled by Dow Jones expected the index to rise to 72.9. "Consumer sentiment has remained trendless in the same depressed range it has traveled during the past five months," said Richard Curtin, Surveys of Consumers chief economist, in a statement. "Although strong gains in consumer spending from the 2nd quarter lows can be anticipated, those gains will significantly slow by year-end without some additional fiscal spending programs." —Fred Imbert
Morgan Stanley said on Friday it believed shares of Apple were poised to move higher after the company's 4-for-1 stock split goes into effect on Monday. "We don't believe the stock-split will be a 'sell the news' type of event among institutional investors given the increasing expectations for the fall iPhone launch, and therefore the increase in retail demand following Monday's stock split is more likely to be a positive catalyst for Apple shares, in our view," analyst Katy Huberty said. The firm, which has an overweight rating on the stock, said it expected "near-term retail demand for Apple shares to increase, especially given the current market environment." Shares of Apple are up 17% this month. - Michael Bloom
Shares of Coca-Cola rose more than 1% in morning trading Friday after the beverage giant announced a workforce restructuring plan. Coke said it will offer voluntary layoff packages to employees who qualify, starting with about 4,000 workers in the U.S., including Puerto Rico, and Canada who were hired on or before Sept. 1, 2017. The company estimated its overall global severance program will cost $350 million to $550 million. On the operations side, nine new divisions will replace 17 business units and will focus on scaling new products faster and eliminating the duplication of resources. — Amelia Lucas, Yun Li
Stocks rose out of the gate on Friday as the major averages looked to end the week on a high note. The Dow gained 104 points, or 0.37%. The S&P 500 and Nasdaq Composite advanced 0.31% and 0.56%, respectively. - Pippa Stevens
Japanese Prime Minister Shinzo Abe said Friday that he will resign due to health concerns. Abe, 65, told reporters that his health began declining in mid-July. The namesake of "Abenomics" has held Japan's top political job since 2012, and his term was set to run until 2021. He said he would continue in the role until a new leader was appointed. — Jesse Pound, Christine Wang
Workday shares jumped more than 10% in premarket trading after the company beat top and bottom line estimates in the second quarter. The company earned an adjusted 84 cents per share, ahead of the 66 cent consensus estimate, according to Refinitiv. Revenue also exceeded expectations and the company raised its forecast. - Pippa Stevens
Gambling plays DraftKings and Penn National both fell in premarket trading after Morgan Stanley downgraded the stocks to equal weight from overweight. The move was partly a valuation call, with both stocks up at least 100% for the year, but Morgan Stanley also identified several negative catalysts that could trip up the stocks in the coming months.
CNBC Pro subscribers can read more here. — Jesse Pound
Pro Subscribers can read more here. - Michael Bloom
Cleveland Fed President Loretta Mester said more economic support from the central bank will be necessary as the recovery will be a "slow one." "There's more pain out there that we're going to have to support the economy through," Mester told CNBC's Steve Liesman in an interview with CNBC's "Squawk Box" on Friday. "It's definitely true that, when the economy started to reopen, you saw better data on hiring and you saw activity increase. But I think the virus is sort of driving things." —Fred Imbert
Bank stocks and long-dated bond yields rose after Fed Chair Jerome Powell's virtual speech at the Jackson Hole, Wyoming, symposium. Powell detailed the central bank's new approach to inflation and unemployment, with the Fed now willing to tolerate inflation above 2% for a period of time if it previously ran below the target level.
One outcome of the new approach, according to some economists, could be stronger job gains for low-wage workers and those in marginalized communities because the Fed would not preemptively tighten policy when unemployment is low to stave off rising inflation. — Jesse Pound
Shares of Ulta Beauty jumped more than 14% during premarket trading on Friday after the company beat bottom-line estimates for the second quarter. Ulta earned 14 cents per share, compared with the 6-cent profit analysts were expecting, according to estimates from FactSet. E-commerce sales more than tripled year over year as consumers flocked online amid the pandemic. Revenue, however, was short of analyst estimates. — Pippa Stevens
U.S. equity futures rose across the board Friday morning as Wall Street appeared set to end a strong week on a high note. Dow futures rose 150 points, or 0.5%, while S&P 500 futures added 0.3%. Nasdaq-100 futures climbed a more modest 0.1%, but all three major indexes looked set to open higher when regular trading resumes at 9:30 a.m. ET.
Any gains on Friday would add to an already-robust week for U.S. stocks. The broad S&P 500 was up 2.5% this week through Thursday's close; the Dow Jones Industrial Average has advanced 2% and the Nasdaq Composite is 2.7% higher over the same period.
The S&P 500, up an impressive 6.5% this month, is on track for its best August since 1986. Monday is the month's final day of trading. — Thomas Franck