Investing.com — Wall Street is expected to trade in a narrow range on Thursday ahead of more labor macro data, a speech from Vice President Kamala Harris and, perhaps more importantly, the start of the Jackson Hole Symposium on Friday.
1. Powell speech will shape market stance
All eyes will be on Grand Teton National Park in Wyoming on Friday, as Federal Reserve Chairman Jerome Powell is scheduled to speak at the annual meeting, a speech that is likely to shape the market’s view of monetary policy and the economy going forward.
Weakening U.S. economic data has given the Federal Reserve the green light to cut interest rates, raising confidence the central bank will do so when it next meets in September.
Minutes from the July Fed meeting showed a “majority” of policymakers agreed that easing was likely to begin next month, meaning Powell’s speech may have been more focused on assessing where the economy is ahead of this first rate cut, rather than further shaping rate-cut expectations.
Risk appetite cooled this week as signs of a sharp cooling in the labor market raised concerns about a significant slowdown in the U.S. economy.
Goldman Sachs expects Powell’s speech and subsequent interviews to emphasize his reliance on data and his caution about cutting rates.
The firm expects Powell to reiterate that the Fed is ready to act swiftly if economic conditions worsen, but to avoid aggressive monetary easing without further data.
“While the academic part of the symposium is likely to influence the longer-term direction of policy, the side interviews should shed more light on immediate policy issues,” analysts at the influential investment bank said.
2. Futures prices rise ahead of Jackson Hole
U.S. stock futures edged higher on Friday ahead of a key speech from Federal Reserve Chairman Jerome Powell at the Jackson Hole Symposium that could signal the start of a rate-cutting cycle from the central bank.
By 4:05 a.m. ET (8:05 a.m. GMT), the contract was up 105 points, or 0.3 percent, then up 23 points, or 0.4 percent, and up 120 points, or 0.6 percent.
Wall Street’s major stock indexes closed sharply lower on Thursday, weighed down by rising Treasury yields. The broader market fell 0.9%, while tech-heavy stocks slid 1.7%, with stocks dropping nearly 180 points, or 0.4%.
Despite the declines, the Dow Jones Industrial Average and the S&P 500 are still up slightly this week, while the Nasdaq is down just 0.1% so far this week amid optimism that the Fed will ease monetary policy.
U.S. economic data will include the latest figures for July later in the session, but the main focus will be on Chairman Powell and his comments on future interest rates.
In the enterprise sector, Uber (NYSE:) announced a multi-year partnership with Cruise, a subsidiary of General Motors (NYSE:), to enable Cruise’s self-driving cars to be deployed on Uber’s ride-hailing platform.
Ross Stores Inc. (NASDAQ:) shares surged in premarket trading after the company raised its fiscal 2024 profit outlook and reported better-than-expected second-quarter results late Thursday, benefiting from demand for discounted clothing and eased shipping costs.
3. Bank of Japan Governor Ueda confirms intention to raise interest rates
Fed Chairman Jerome Powell is in the spotlight on Friday. [see above]But other major central banks also have to make policy decisions in this uncertain economic climate.
At the start of the meeting, the Bank of Japan governor reiterated his intention to raise interest rates but warned that financial markets remain volatile.
“Short-term interest rates in Japan are very low. If the economy is doing well, they will rise to a level that is considered neutral,” Ueda said. But he added that there is “a lot of uncertainty about how high interest rates will ultimately rise.”
The Bank of Japan ended negative interest rates in March and raised its short-term policy interest rate to 0.25% in July, moving away from a decade of ultra-loose monetary policy.
In Europe, attention is now focused on the September meeting of European Central Bank (ECB) policymakers, who left interest rates on hold last month after beginning a rate-cutting cycle in June.
European Central Bank (ECB) policymaker Martins Kasakus said on Thursday that the central bank has room to cut interest rates two more times this year as inflation remains broadly on the downward trajectory policymakers had envisaged.
“Our June forecast envisaged two more rate cuts this year and we see no reason at this point not to do so,” Latvia’s central bank governor Kazaks said, adding that he would only decide about September once August inflation figures are released and the ECB’s new forecasts are seen.
4. Harris formally accepts the Democratic nomination
Kamala Harris formally accepted the Democratic nomination for president in 2024 during a speech on the final day of the Democratic National Convention in Chicago on Thursday.
She said passing tax cuts for the middle class would be a key goal of her presidency, and she also promised to improve housing and social services.
Harris also repeatedly addressed gun control and reproductive rights, which have already become major issues in her campaign.
The first debate between Harris and Trump is scheduled for September 10, with the vice presidential debate scheduled for October 1. A second presidential debate could be added in October.
Since President Joe Biden dropped out of the 2024 presidential race earlier this year with just over two months until Election Day, Harris has been seen steadily catching up to Trump in a series of recent polls.
Since Aug. 1, the odds of a Republican winning the White House have fallen by 10 percentage points, and the chances of Republicans controlling both houses of Congress and the presidency have fallen by 4 percentage points.
Goldman Sachs economists said earlier this week that the most likely outcome in the next election is a Harris victory in a divided government.
5. Oil prices set for sharp weekly drop
Oil prices rose slightly on Friday but are on track to fall sharply for the week as concerns about slowing demand persist.
By 4:05 a.m. ET, futures (WTI) were up 0.5% to $73.39 a barrel, while contracts were up 0.5% to $77.62 a barrel.
Both benchmark crude oils hit their lowest levels since early January this week, with Brent crude futures down about 3% so far this week and WTI crude futures down nearly 5%.
Latest data from China, the world’s largest oil importer, suggested a slowdown in its economy and demand from the country’s refiners, while a big revision to U.S. employment data earlier this week raised the possibility of a hard landing for the economy of the world’s biggest energy consumer.
Renewed moves towards a ceasefire in Gaza between Israel and Hamas and talks between U.S. and Israeli delegations in Cairo to resolve differences over the plan also eased supply worries, weighing on oil prices.
Concerns about an oil glut are also growing after U.S. crude production hit a record high of more than 13 million barrels per day in early August and the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) plan to increase production this year.
