Well, we got what they wanted to hear from Federal Reserve Chairman Powell at Jackson Hole this morning; rate hikes will be gradual as it doesn’t appear to be “an elevated risk of overheating.”   Inflation has been edging up to the 2% Fed target; however, “we have seen no clear sign of an acceleration” higher than that.  Powell did caveat that potential risk factors “abroad and at home that, in time, could demand a different policy, response”.

Overall, this was music to investors’ ears as two rates hikes, one in September (90% probability) and one potentially in December (60% probability) are widely anticipated and quite frankly, baked in to the market. In addition, the Fed is slowly and methodically shrinking its balance sheet.

Stocks started the day in the green and have continued to pick up speed powered by Powell’s comments that, “With solid household and business confidence, healthy levels of job creation, rising incomes and fiscal stimulus arriving, there is good reason to expect this strong performance will continue.”

The Nasdaq and S&P 500 are at all-time intraday highs and are breaking out, up 0.6% to 2874, and 0.82% to 7.943, respectively. The Dow is trading up about 150 points, to 25,806.  So far for the week, the Dow is up .6%, the Nasdaq +1.6%, and the S&P +0.9% and it is on track for its second consecutive weekly gain.

Chipmakers continue to outperform, and the Philadelphia semiconductor index is up 1.2%.  Advanced Micro (AMD) is on a tear.  Money flow into AMD has captured the number one spot for non-risk adjusted rankings, a useful measure for the short term, and has taken over AMZN’s spot. AMD is up 120% this year, while AMZN is up roughly 60%. AMD is trading up 5.3% today to $23.52, a 12 -year high. 

Energy and Materials are also strong, while consumer staples and utilities lag.  At midday, advancers outpace decliners 1949/829 on the NYSE and 1768/991 on the Nasdaq. 

Treasuries and the U.S. dollar are down on the Powell’s comments, with the 10-year relatively flat, now at 2.821%, and the dollar index, DXY, is down .60% to 95.09.

Have a great weekend.