Image Source: Unsplash

Last week was the best week for stocks in 2024, as all three major stock market indexes posted their best results of the year.

It is a bit unusual, as August is typically a sleepy month for the stock market, but this August has been anything but sleepy. Just two weeks ago, on August 5, the markets had their worst day of the year, with the Dow Jones Industrial Average plummeting more than 1,000 points and the Nasdaq dropped 3.4%.

However, the markets gained back much of what it lost that day, and the momentum carried into last week, the best week for stocks this year. Will the forward momentum spill over into this week?

Nasdaq gains 5.3%

Since hitting a closing high of 18,647 on July 10, the Nasdaq Composite dropped some 13% to 16,200 on August 5 after the market crash. But it has gained back about 9% since then, with the bulk of that coming last week, when it had its best week of the year, rising 5.3% to close Friday at 17,632.

The S&P 500 also outperformed, rising 3.9% to 5,554 last week, while the Dow Jones Industrial Average surged 2.9%. Like the Nasdaq, this was the best week of 2024 for the S&P 500 and the Dow.

The Russell 2000 also surged, rising 2.9% to 2,142 at the close of the market Friday, but this was not its best week of the year. The Russell 2000 rose roughly 6% in the week ended July 12.

There was a confluence of factors that made it the best week for stocks, most notably, the Consumer Price Index (CPI) fell for the fourth straight month. The July CPI report, which came out on Wednesday, placed the inflation rate at 2.9%, which is the first time since March 2021 that it has been below 3%.

The good economic news kept coming Thursday and Friday. On Thursday, the Census Bureau released the Retail Sales report that showed retail sales up 1% in July, which was better than expected. This further quelled investors’ fears of an economic slowdown.

Then on Friday, the University of Michigan’s Consumer Sentiment Survey climbed 2.1% in August, which was much more than economists had expected. The sharp increase indicates that consumers are more hopeful about the state of the economy going forward.

Markets open Monday higher, Powell speaks Friday

The markets opened Monday morning slightly higher, led by the Dow Jones Industrial Average, up some 153 points, or 0.4%, as of 10:30 a.m. ET. The Russell 2000 was also up 0.4%, while the S&P 500 gained 0.2% and the Nasdaq ticked up 0.1%.

There isn’t as much key economic data on the docket this week, although Thursday and Friday features initial jobless claims, along with reports on manufacturing and new and existing home sales.

But it is a big week for the Fed, as the minutes of the July FOMC meeting are released Wednesday and Fed Chair Jerome Powell speaks Friday at the annual Jackson Hole Economic Symposium, hosted by the Kansas City Fed.

This annual gathering of central bankers, policymakers, academics, and economists is always closely watched, and this year perhaps even more so, as it is Powell’s first major speech since the July FOMC meeting. Most investors are expecting the Fed to cut the Federal Funds rate in September, so they will be looking for clues in Powell’s speech on Friday.

Retail earnings this week

Earnings season is slowing down, but retailers take center stage as this week features reports from Lowe’s (NYSE: LOW), Target (NYSE: TGT), Macy's (NYSE: M), and BJs (NYSE: BJ).

Also, tech company Palo Alto Networks (Nasdaq: PANW) reports earnings Monday after the market closes, while Snowflake (NYSE: SNOW), which Warren Buffett and Berkshire Hathaway just completely sold off, reports Thursday.

Last week will be a tough act to follow, but there is some potential for the momentum to continue, particularly on Friday, as all ears will be on Jackson Hole and Powell.  

More By This Author:

Ulta Beauty Stock Pops As Warren Buffett Discloses $266M Stake
Warren Buffett Added 2 New Stocks In Q2 While Selling Apple
How Long Will Stocks Remain Undervalued Once Prices Drop Below Fair-Value Levels?