The Standard and Poors 500 index (SPX) opened higher this morning. It appeared that many of the large players believed Powell’s speech was going to hint at lower rates. And shortly after 10 am ET (the schedule for his speech in Jackson Hole), the market was off to the races. The S&P 500 index tacked on 97 points today, closing at 6467 for a 1.5% gain on the day and up 0.3% for the week. However, trading volume continued to run below average all week.

VIX, the volatility index for the S&P 500 options, opened the week at 15.7%, increased to a high of 17.2% on Thursday and then dropped to 14.2% today. Powell’s speech relieved a lot of tension in the markets.

I track the movement of the ETF containing the top 100 S&P 500 stocks ranked by beta, SPHB, to monitor the movement of high beta stocks. SPHB closed at 104.9 today, up 3.4 points or +3.3%.  SPHB opened the week at 103.1 and rose 1.7% on the week. Trading volume spiked higher today as the institutional players started buying high beta stocks, anticipating the market’s continued rise.
 
The NASDAQ Composite index declined most of the week, but that changed today. NASDAQ closed up 396 points at 21,497, up 1.9% on the day but up only 0.6% for the week. NASDAQ’s trading volume remained below average all week but finally hit the 50 dma today.

The market has been struggling this year over a variety of concerns, including the effects of tariffs on inflation, global tensions in Israel and Iran, and the continuing war in Ukraine. The report of +3.0% GDP growth for the second quarter surprised economists several weeks ago but that didn’t seem to affect the market.

The IBD stock market exposure recommendations have been whipsawing up and down all month. First the recommended level of 80-100% declined to 60-80% on August 1, reversed back to 80-100% a week later and recently dropped back to 60-80%. But today’s market rally, triggered by Powell’s speech at Jackson Hole caused IBD to return to the 80-100% recommended stock market exposure. 

Jerome Powell suggested that economic conditions “may warrant” rate cuts at the September meeting, but he was careful to issue many caveats as well. As one may gather from the current economic data, it is easy to predict positive market conditions for the immediate future. I think the current polarization of our political environment causes a significant amount of market anxiety. Today’s market rally was driven by Powell’s remarks this morning, with the Dow hitting a new all time high, the S&P 500 index rising 1.5% (very close to an all-time high) and NASDAQ rising 1.9%.

I will be watching for confirmation of today’s bullish move on Monday, but I expect to find new buying opportunities in this renewed bull market.