Fed Rate Debate
Cleveland Fed President Beth Hammock says now is the time to act on raising interest rates. She argues inflation stays too high and has run well above the Fed's target for 5 years, and she worries about its hit to household budgets. Her view adds to a split inside the Fed, where officials weigh stubborn inflation against signs of slower growth. Hammock was one of three dissenters at the July Fed meeting who wanted a rate hike.
Cybersecurity Stocks Surge
Cyber stocks jumped after strong earnings from Okta (OKTA) and CrowdStrike (CRWD). Okta closed up more than 28%; CrowdStrike gained more than 20%. CrowdStrike reported $1.47 billion in revenue, up 26%, and raised its full-year outlook. Okta posted $85 million in revenue, up 11%, with current remaining performance obligations up 14%. The results suggest AI is driving new cyber demand as firms protect growing numbers of AI systems, data, and autonomous agents. The rally lifted other cyber names: Palo Alto Networks (PANW) rose more than 12% and Fortinet (FTNT) close to 10%, read as a broader signal for the sector.
U.S. and Asian Memory Stocks Diverge
Asian and U.S. memory chip stocks split after Nvidia's (NVDA) report. Memory names came off their lows by the close. South Korean firms Samsung and SK Hynix, plus Japan's Kioxia, outperformed, while Micron (MU), SanDisk (SNDK), and Western Digital (WDC) mostly traded lower.
Nvidia said it sharpened its focus on securing memory supplies for data centers and is spending more to do so, which was read as bullish for memory. That could mean even stronger demand for Samsung and SK Hynix, since Nvidia has been locking in supplies of critical parts from South Korea, including a recently announced $500 billion deal with SK Hynix. The day's moves may show who controls the HBM (high-bandwidth memory) supply Nvidia is securing. Nvidia says it works closely with all suppliers, including Micron, but SK Hynix and Samsung hold most of the HBM supply.
In related news, NAND flash memory makers Kioxia and SanDisk plan to invest more than $31 billion in Japan to boost chip supply. The spending runs through 2032, with operations set to begin in 2029.
Looking Ahead
Bank of America calls Jackson Hole a key risk event. Many expect little from it, since Fed Chair Warsh has been careful in his comments so far. The Fed chair usually uses Jackson Hole for an important long-range message; Bernanke announced quantitative easing there in 2010. Warsh has said he is charting a new path on communication and forecasting, so the question is whether he sticks to that or gives clues about the path forward. There is no press conference, so whatever he says stands on its own.
The corporate earnings calendar slows to a crawl with no major names, letting the market focus on Jackson Hole and digest a heavy reporting week. Watch the reaction to Workday (WDAY), down about 5.25% at the time, to see if software's outperformance can hold. The final University of Michigan consumer sentiment read is also due, a check on how consumers feel now.
