Stocks rebounded last week as positive longer term catalysts outweighed short-term negative setbacks. Following the attacks in Kabul on Thursday, market participants took profits and drove down stock prices, measured by the S&P 500. The holding pattern was short lived, as investors interpreted comments from Federal Reserve Chairman Jerome Powell as dovish with regard to the central bank’s plan to start gradually reducing bond purchases by the end of the year. The chairman noted the “clear progress” in the labor markets boosting investor confidence on Friday.
Treasury yields rose moderately on longer-term bonds over the course of the week as the Federal Reserve made comments at this week’s annual Jackson Hole symposium. Early in the week, yields were mostly flat as investors speculated on the timing of the anticipated tapering process. Dallas Fed President Robert Kaplan said he would be open to changing his mind if there was evidence that Covid’s delta variant was slowing the economy. However, evidence that daily new Covid cases are reaching a plateau and a growing number of government and private employer vaccine mandates have caused a softer demand for Treasuries and yields rose moderately.