Equities Rally on Pfizer FDA Approval

Pfizer gets FDA approval, investors look to Jackson Hole meeting

Rates were rangebound during today’s session as investors prepare for the Fed’s Jackson Hole meeting later this week while all three major equity indices rallied on the day as Pfizer’s COVID vaccine was given FDA approval. Investors are primarily focused on the Fed’s Jackson Hole meeting later this week. Chairman Powell will speak at 10a EST on Friday as investors will look to get more clarity on potential policy changes concerning the Fed’s bond purchasing program and rate hike timeline. In recent weeks many Fed members have indicated a willingness to make a bond taper announcement as early as 4Q of this year if the labor market continues to improve. However, increasing COVID cases due to the delta variant may throw cold water in any near-term policy change.

Mixed business activity data for July and August

Material and labor shortages negatively affected output during August as purchasing managers continue to struggle to meet increasing demand. The IHS Markit PMI data showed slowing business activity in August with the IHS Markit composite index decreasing to 55.4, the index’s lowest reading since December 2020. A reading above 50 indicates growth. In contrast to the August IHS data, the Chicago Fed’s July activity index showed solid expansion in the national economy during July with a reading of 0.53 as 56 of the 85 monthly indicators positively contributing to the index. A reading above 0.0 indicates the national economy is expanding greater than its historical average.  

Strong housing demand continues as inventory lags

Housing demand continues to exceed supply as sales of existing homes increased 2.0% month-over-month in July and 1.5% year-over-year. The median selling price for existing homes rose 17.8% compared to the prior year as inventory was down 12% during the same period.