Traders are gearing up for Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole symposium, with expectations running high for a potential interest rate cut. Following Thursday’s slight dip, stock futures are pointing towards a positive open on Friday, with the major indices showing modest gains.
While analysts are anticipating a neutral tone from Powell, some speculate that he might signal a rate cut, citing recent economic data and the ongoing inflation slowdown. Fund manager Louis Navellier believes Powell will acknowledge the recent moderation in inflation and the strong labor market. Macquarie analysts, on the other hand, expect a more cautious approach. “We wouldn’t be surprised by a moderate tone from Powell, which could have implications for currency markets and investor sentiment,” they said.
The market’s resilience and recent economic data, particularly the July jobs report and downward revisions to non-farm payrolls, have bolstered expectations for a rate cut. Strategist Tom Lee of Fund Strat believes that a rate cut would inject more life into the economy and markets, benefiting cyclical and small-cap stocks in particular. He also highlighted the positive outlook for the tech sector, driven by artificial intelligence advancements.
In addition to Powell’s speech, investors are awaiting key economic releases, including the Commerce Department’s new home sales report for July. Economists predict a slight increase in sales compared to June.
Meanwhile, several companies are reporting quarterly earnings, including BILL Holdings, CAVA Group, Ross Stores, and Workday, which have seen positive premarket trading. Crypto-linked stocks are also firming up, with MicroStrategy and Coinbase showing significant gains.
Commodities markets are trending upwards, with crude oil and gold futures both showing strong performance. Bitcoin also gained ground, trading above the $61,000 level. The yield on the 10-year Treasury note edged down slightly.
Asian markets were subdued, reacting to the overnight pullback in Wall Street stocks. European markets, however, are showing gains in early trading.
