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Yahoo
19 minutes ago
- Yahoo
All Eyes on Powell: Will Jackson Hole Speech Spark a Big Stock Market Move?
Key Takeaways Traders expect the S&P 500 to move about 0.8% in either direction through the end of the week, with Fed Chair Jerome Powell's speech on Friday likely to be a driving force behind that move. Stocks jumped more than 1% the day of last year's Jackson Hole speech, when Powell signaled the Fed was ready to cut interest rates for the first time in 4 years. Analysts earlier this week expressed concern that investors were overly optimistic about the likelihood of a September rate cut, but expectations and stocks have drifted lower in recent days. Wall Street was on edge Thursday, with stocks trading lower as investors awaited what could be a pivotal policy speech from Federal Reserve Chair Jerome Powell. Powell is scheduled to speak Friday morning at the Fed's annual Jackson Hole Economic Policy Symposium. Investors will be scrutinizing Powell's address for signs that the Fed is ready to resume cutting interest rates in September after nine months on hold. Powell's speech is the biggest event of the week for the stock market, and traders are positioning themselves accordingly. Options pricing suggests investors expect the S&P 500 to move about 0.8% in either direction through the end of this week. That's nearly twice the S&P 500's average daily move over the past month. Will History Repeat Itself at Jackson Hole? At last year's Jackson Hole, Powell declared the Fed was ready to begin cutting interest rates more than a year after policymakers hiked rates for the 11th and final time in their post-pandemic policy tightening campaign. 'The time has come for policy to adjust,' Powell said. 'With an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to 2 percent inflation while maintaining a strong labor market.' It was the news Wall Street was hoping for. The S&P 500 jumped more than 1% to trade just shy of an all-time high. Though for investors last year, seeing was believing; it wasn't until mid-September, when the Fed cut rates for the first time, that the index finally broke its previous record. Rate Cut Expectations—and Stocks—Are Falling Evercore ISI analysts warned in a note on Sunday that Powell's speech could deliver stocks a rough patch if Wall Street finds his comments inadequately dovish. 'For a market that was eager to embrace '50 in Sept', a balanced view could catalyze a near term -7% to -15% pullback into October,' the analysts wrote, referring to recent speculation that the Fed could make a jumbo, 50 basis point (bps) cut next month. Deutsche Bank economists are also worried about Wall Street's high hopes. In a note earlier this week, they expressed concern that Powell's comments, which they expect to be 'more balanced' than his last statement in July, 'could create uncertainty about September cut prospects, at least relative to current elevated pricing.' But expectations and stock prices have moderated in recent days. The S&P 500 fell in each of the last four sessions. If the index declines on Thursday, it will mark its longest losing streak this year. And in the last week, traders have become less confident of any rate cut, let alone a jumbo one, in September. Federal funds futures trading data put the odds of a 25 bps cut at about 72% on Thursday, down from 92% a week ago, according to CME Group's FedWatch Tool. Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19 minutes ago
- Yahoo
Powell's Jackson Hole speech: Here's what he'll probably discuss
The Kansas City Federal Reserve's Jackson Hole Economic Symposium is underway, with Fed Chair Jerome Powell set to deliver his final Jackson Hole speech as Fed chair on Friday. NewEdge Wealth chief investment officer Cameron Dawson, Yahoo Finance Senior Reporter Allie Canal, and Yahoo Finance Senior Reporter Brooke DiPalma join Opening Bid host Brian Sozzi to discuss whether Powell's speech could move markets. To watch more expert insights and analysis on the latest market action, check out more Opening Bid. All right, switching gears here. Jerome Powell will deliver the final Jackson Hole speech of his tenure as chair of the Federal Reserve on Friday. And that emotional moment, at least for me and many market watchers, has sparked my question of the day. Will Powell's remarks meaningfully move markets? Still with me on the opening bell round table, Cameron Dawson, NewEdge Wealth chief investment officer, Ali Canal, and Brooke DiPalma. Cameron, are we looking at a big move here tomorrow? Well, we don't think that Powell wants to say a lot. He wants to leave as many options open as he possibly can because we get another CPI print and another non-farm payrolls print before they meet in September, which just means that there could be some surprises there. Another weak payrolls print would pretty much solidify a cut for the Fed in September, but we think that there is more likelihood that we could start to see some more spiciness within inflation prints. We, of course, got the PPI back a couple of weeks ago that showed this rate, this rise in producer inflation, but there's signs under the surface of consumer inflation where things are ticking up. And it's not just in goods and durable goods where we see the most tariff impact, but we're also seeing the tick up in core services ex-housing, which is very sensitive to wages, which means that the fall in the labor force because of immigration policy could be impacting overall inflation. So we think the Fed's back is very much in a corner, which just means that at this speech, it probably won't say much simply because they want to strike that tone of data dependence as much as possible. Ali, I'm on Team Cameron here. I think there is spice coming in these inflation prints over the next few months. Just my take just looking through the prism of retailers and a lot of common sense economic data. I don't think Jerome Powell's going to say anything that the Bulls want to hear. I just don't think he's going to come out and say or even signal that rate cuts are coming. Just my personal view. Yeah, and I totally agree. I think when you take a look at inflation, that sticky services inflation that Cameron was mentioning, that's a big problem point for the Fed. And if you even read the Fed minutes that were just released yesterday, they were saying that inflation is more of a concern than the labor market. Of course, that happened before we got those significant downward revisions, and we will have that other label labor market print coming out before the September rate decision. And that's likely what Jerome Powell is going to talk about at Jackson Hole tomorrow. We did see jobless claims tick up a bit today, and the trend that we're seeing from continuing claims points to the unemployment rate rising slightly to 4.3% in August. That would be up from the current 4.2% that we're seeing. But in terms of what markets continue to expect, they're pricing in that September rate cut. We're at about 77% odds, according to the latest CME Fed fund futures. Now, it's less conviction to where we were a week ago when we were around 90%, but still the bulk of investors are anticipating that rate cut. Now, what's interesting is that we spoke with Interactive Brokers Chief Strategist Steve Sosnick yesterday on Stocks and Translation, that episode available this morning, and he was saying to look at the VIX because the VIX that obviously measures demand for volatility protection against S&P options. The standard VIX reflects options about 30 days out. However, if you take a look at the VIX nine day, that includes things like Jackson Hole and even Nvidia earnings, that's barely budged here. So that suggests investors aren't rushing to hedge against short-term risks here that includes Jackson Hole. So maybe we won't see that crazy reaction in the stock market tomorrow, especially since there's been a lot more commentary that Powell likely won't say too much of anything. I think he might lean a little more hawkish, but again, we'll have to wait and see. Typically, there is a lot of volatility around this symposium, and September in general typically leads to more volatile pricing action, and you can even see that from some of the rotational trading that we've seen over the past few days. Ali, you are you are right on with that analysis. Jerome Powell has signaled nothing. It is amazing to see those market expectations for rate cuts. Amazing. I just, I don't really know what markets are hanging their head on. I guess it is this perception that CPI maybe came in, you know, roughly in line, that helped fuel a lot of these expectations. But again, even in the CPI print, services was still sticky. Of course, the PPI print didn't really move the needle much when it comes to expectations, and neither did those revisions. So I just think markets are hoping and and praying really that we see those rate cuts, something that we could see reinvigorate the housing market, which, you know, even these retailers have talked about that's been really stagnating. Something that President Trump really wants as well. However, I just don't see Jerome Powell leaning too far into that when we still have a lot more data to come before that September decision. And even if you look across Wall Street, Brian, economists aren't saying that September is a sure bet. We have Morgan Stanley still calling for no rate cuts this year at all. So it's not even like economists on Wall Street are fully on board with that September rate cut. There's still a lot more to be seen. And when you have both sides of the Fed's dual mandate really competing against each other and creating greater risks of stagflation, that makes the story a lot more complicated.
Bloomberg
23 minutes ago
- Bloomberg
DOJ Urges Fed's Powell to Remove Governor Cook
00:00 The Trump administration, as we were just saying, ramping up pressure on Fed Governor Lisa Cook over her two mortgages. We know that Cook issued a statement today saying that she will stay on at the Federal Reserve. Do we know if she's attending the event and kind of moving on with business as usual right now? It's a great question. Scalia Our understanding is that she was planning on attending. I haven't seen her yet perusing the Grand Tetons as of yet. A real question here, though, of how much this will hang over, if not the public commentary of Fed members, but maybe the private commentary. They all have imagines that they have been under investigation at one point or another. And a real question here of what is the ultimate goal? There is this feeling that President Trump wants to reshape the Federal Reserve and the Board of Governors is a key way to do it. But to what end? Yes, to lower rates. But it is a very complicated economic time. And that's reason why a lot of people are trying to keep their heads down, focus on exactly that, and create the policies that will reduce longer term inflation without torpedoing the labor market. All right. And just we should mention as well, Ed Martin, a Justice Department official, did say in his letter at this time, I encourage you to remove this cook from your board and do it today before it is too late. After all, no American thinks it is appropriate that she served during this time with a cloud hanging over her. To your point about this idea that this is a cloud hanging over the event in Jackson Hole.
